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connected with a U.S. trade or business is whether "the income,
gain, or loss is derived from assets used in or held for use in
the conduct of such trade or business" (asset-use test). Sec.
864(c)(2)(A). Additionally, the Code provides that "due regard
shall be given to whether or not such asset or such income, gain,
or loss was accounted for through such trade or business." Sec.
864(c)(2). The regulations provide that the asset-use test
ordinarily applies "in making a determination with respect to
income, gain, or loss of a passive type where the trade or
business activities as such do not give rise directly to the
realization of the income, gain, or loss." Sec. 1.864-
4(c)(2)(i), Income Tax Regs. The regulations state that the test
is "of primary significance where, for example, interest or
dividend income is derived from sources within the United States
by a nonresident alien individual or foreign corporation that is
engaged in the business of manufacturing or selling goods in the
United States." Id.
d. Section 864(c)(2)(B)
Business-Activities Test
The Code provides that another factor to consider in
determining whether income is effectively connected to a U.S.
trade or business is whether "the activities of such trade or
business were a material factor in the realization of the income,
gain, or loss" (business-activities test). Sec. 864(c)(2)(B).
Additionally, the Code provides that "due regard shall be given
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