- 193 -
years ended June 30, 1983 and 1984. We are therefore unable to
apply the lookback rule in section 861(a)(2)(B) to the dividend
in issue. Consequently, we consider the percentage figure in
section 861(a)(2)(B) to have been conceded by petitioners. Rybak
v. Commissioner, 91 T.C. 524, 566 (1988). Accordingly, we hold
that 100 percent of LTD’s gross income from all sources for the
3-year period ending with the close of its taxable year preceding
the declaration of the dividend in issue was effectively
connected with the conduct of LTD’s trade or business within the
United States. Sec. 861(a)(2)(B).
Because more than 50 percent of LTD's gross income was
effectively connected for the applicable 3-year period, the
amount of the dividend in issue that is to be treated as from
sources within the United States bears the same ratio to such
dividend as the amount of effectively connected income bears to
gross income from all sources. Id. The ratio that LTD’s
effectively connected income bears to LTD’s gross income from all
sources is, for purposes of section 861(a)(2)(B), 100 percent.
Accordingly, the amount of the dividend in issue that is to be
treated as from sources within the United States is 100 percent.
Id. The entire dividend paid by LTD to its shareholders is
therefore subject to a 30-percent tax on nonresident alien
individuals. Sec. 871(a).
The parties have not briefed the issue of whether LTD is
eligible for the withholding exemption pursuant to section
Page: Previous 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 NextLast modified: May 25, 2011