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document interpreting that relationship is the discretionary
authorization, which states that the client is to pay LTD "as
full compensation for the services performed hereunder an annual
fee". The phrase "services performed hereunder" refers to the
four activities that the clients, by signing the discretionary
authorization, authorize LTD to perform. Those activities
include instructing banks on the disposition of client assets,
working with brokers on the disposition of client assets,
applying client deposits with LTD to client investments, and
paying bills for a client. In sum, the services listed in the
discretionary authorization do not include promoters’ services in
Mexico, as petitioners argue. The four activities for which the
management fee was paid all appear to be services that were
performed in San Antonio. Accordingly, we hold that the
management fee is characterized as compensation for personal
services performed in the United States and is treated as income
from sources within the United States. Sec. 861(a)(3).
b. Service Fees
(1) U.S. Certificates of Deposit
and Bank Deposits
We must decide two issues: (1) The proper amount of income
in issue and (2) the proper characterization of such income. As
to the proper amount of income in issue, the parties stipulated
to the "Gross Receipts" and the "Direct Costs" relating to LTD’s
"Interest Income". The "Gross Receipts" included all interest
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