- 152 -
within the meaning of the section 1.864-7(d)(3)(i), Income Tax
Regs. Accordingly, INC's office shall not be disregarded in the
examination of whether LTD has an office or other fixed place of
business for purposes of section 864(c)(4)(B). We have held,
supra p. 79, with regard to the exclusion for trading in stocks
or securities pursuant to section 864(b)(2)(C) that LTD has "an
office or fixed place of business in the United States" within
the meaning of section 1.864-7, Income Tax Regs. Consequently,
we hold that LTD has "an office or other fixed place of business
in the United States" for purposes of section 864(c)(4)(B).
The second test provides that income, gain, or loss is not
to be considered as attributable to an office or fixed place of
business within the United States unless such office or fixed
place of business is a material factor in the production of such
income, gain, or loss. Sec. 864(c)(5)(B). The regulations
provide that loan interest meets the materiality test if it
satisfies either of the following alternative requirements:
the office or other fixed place of business either
actively participates in soliciting, negotiating, or
performing other activities required to arrange, the
issue, acquisition, sale, or exchange, of the asset
from which such income, gain, or loss is derived or
performs significant services incident to such issue,
acquisition, sale, or exchange. * * * [Sec. 1.864-
6(b)(2)(ii), Income Tax Regs.]
The San Antonio office meets both of the alternative
requirements. As to the first requirement, the office actively
arranged the loan from which the loan interest was derived by
Page: Previous 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 NextLast modified: May 25, 2011