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Petitioners contend that LTD’s "real business" was "to
render investment advice to clients in Mexico." Accordingly,
petitioners argue that all of the activities relating to LTD’s
business occurred in Mexico: LTD’s clients were solicited and
advised by Mexican-based promoters in Mexico, their accounts were
opened and approved in Mexico, clients changed their investment
portfolios in consultation with their Mexican promoter, and the
spread (where applicable) was negotiated in Mexico. Petitioners
contend that INC performed merely ministerial activities in the
United States and did not render any investment advice to clients
in Mexico. On those premises, petitioners conclude that LTD’s
"real business"--even if INC’s activities were imputed to LTD--
did not occur in the United States.
We disagree. Contrary to petitioners’ argument, we believe
that the term "performance of personal services within the United
States" for purposes of section 864(b) does not require that LTD
itself perform such "personal services" in order to be engaged in
"trade or business within the United States."
We first look to the "real business" of the taxpayers, the
"doing of what * * * [the taxpayers] were principally organized
to do in order to profit". Scottish Am. Inv. Co., v.
Commissioner, supra at 59. LTD is a corporation organized
pursuant to the laws of the Cayman Islands. Based on the record,
we believe that the "real business" of LTD, the doing of what LTD
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