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We conclude that LTD’s Currency Fund commission is
compensation for investment services. As stated in its
promotional material, LTD acted as "Manager" of the Currency
Fund. The services that LTD rendered in relation to the Currency
Fund included accepting clients' deposits, opening an account
with a foreign bank, and issuing clients periodic statements.
All of such activities were performed through the office in San
Antonio. We disagree with petitioners' contention that only the
selling of the fund is to be examined in deciding the source of
the commission income. LTD provided many services beyond the
initial sale of the fund. We conclude that LTD’s commission was
compensation for providing those services, not for selling the
fund. In sum, LTD’s management of the Currency Fund entailed
performing personal services in San Antonio. Accordingly, we
hold that LTD's Currency Fund commission 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).
We similarly conclude that LTD’s FEIM Fund commission is
compensation for investment services. The services that LTD
rendered in relation to the FEIM Fund included accepting clients'
deposits, transferring those deposits to Merrill Lynch, and
issuing periodic statements to clients. All of those activities
were performed through the office in San Antonio. We disagree
with petitioners’ contention that only the selling of the fund is
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