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attributable". Sec. 864(c)(4)(B); see sec. 1.864-6(b)(2)(ii)(a),
Income Tax Regs.
Based upon our analysis of the interest from loans, supra
pp. 142-145, and applying a similar analysis to the MMA II
interest, we hold that the MMA II interest satisfies the three
tests to be applied in deciding whether a taxpayer has "an office
or other fixed place of business within the United States to
which such income, gain, or loss is attributable" within the
meaning of section 864(c)(4)(B). Consequently, we conclude that
the MMA II income is effectively connected income pursuant to
section 1.864-6(b)(2)(ii)(d)(2), Income Tax Regs., and section
864(c)(4)(B).
Nonetheless, any foreign source income deemed effectively
connected shall not be treated as effectively connected if such
income, assuming it were derived by the taxpayer from sources
within the United States for the taxable year, would not be
treated as effectively connected pursuant to the rules for U.S.
source income. Sec. 1.864-5(a), Income Tax Regs. Accordingly,
we must analyze whether LTD’s foreign source MMA II income, if it
were U.S. source income, would be effectively connected.
LTD’s MMA II interest, if U.S. source, would be any "income,
gain, or loss from sources within the United States" not already
described in the first two categories of U.S. source income and,
therefore, would fall under the third category of U.S. source
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