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Interest that is not treated as income from sources within
the United States pursuant to section 861(a)(1) is treated as
income from sources without the United States. Sec. 862(a)(1).
Notwithstanding section 861(a)(1) and the regulations thereunder,
however, certain interest is treated as income from sources
without the United States. Sec. 1.861-2(b), Income Tax Regs.
One type of interest that is not treated as income from sources
within the United States is interest that is received by a
nonresident alien individual or a foreign corporation on amounts
described in section 861(c), if such interest is not effectively
connected with the conduct of trade or business within the United
States. Sec. 861(a)(1)(A). The amounts described in section
861(c) include, inter alia, "deposits with persons carrying on
the banking business." Sec. 861(c)(1).
The Code and the regulations do not define “deposits” for
purposes of section 861(c). The Commissioner, however, has
interpreted the term "deposits" to include, for purposes of
section 861(c), "time certificates of deposit, open account time
deposits, and multiple maturity time deposits, all of which are
interest bearing." Rev. Rul. 72-104, 1972-1 C.B. 209, 209.
The regulations provide that the phrase "persons carrying on
the banking business" includes, for purposes of section 861(c),
citizens of the United States or alien individuals and foreign or
domestic partnerships or corporations. Sec. 1.861-2(b)(1)(a),
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