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contend that the income is not effectively connected income
because it is not one of the types of foreign source income that
is deemed effectively connected income pursuant to section
864(c)(4)(B) or (C).
Respondent contends that the currency exchange transactions
income is, alternatively, (1) personal services income or (2)
gain from the sale of personal property. Respondent contends
that such income is effectively connected income pursuant to the
business-activities test because the activities of LTD's U.S.
business were a material factor in the realization of the income.
We have held, supra pp. 111-112, that the currency exchange
transactions income is characterized as personal services income
and is treated as income in part from sources within the United
States and in part from sources without the United States. For
the portion of income which is foreign source, we agree with
petitioners that such income is not effectively connected income
because it is not one of the types of foreign source income that
is deemed effectively connected income pursuant to section
864(c)(4)(B) or (C). For the portion of income which is U.S.
source, we hold that such income is 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,
falls under the third category of U.S. source income of a foreign
corporation engaged in the active conduct of a banking,
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