Inverworld, Inc., et al. - Page 209

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            the United States, are taxed at 30 percent pursuant to section                                
            881(a), but if sourced from without the United States, are not                                
            subject to U.S. taxation.                                                                     
                  1.  Background                                                                          
                  For purposes of section 882(a)(1), the phrase "trade or                                 
            business within the United States" generally includes "the                                    
            performance of personal services within the United States at any                              
            time within the taxable year".  Sec. 864(b).  We believe that                                 
            section 1.864-4(c)(5)(i), Income Tax Regs., which determines                                  
            whether a foreign corporation is "engaged in the active conduct                               
            of a banking, financing, or similar business in the United                                    
            States", provides a useful framework in the instant case for                                  
            analyzing whether LTD engaged in trade or business within the                                 
            United States.  For, if LTD engaged in the active conduct of a                                
            banking, financing, or similar business in the United States,                                 
            then, a fortiori, LTD was engaged in trade or business within the                             
            United States.                                                                                
                  2.    Section 1.864-4(c)(5)(i), Income Tax Regs., Engaged in                            
                        a Banking Business Test                                                           
                  Section 1.864-4(c)(5)(i), Income Tax Regs., provides that a                             
            foreign corporation is considered                                                             
                  to be engaged in the active conduct of a banking,                                       
                  financing, or similar business in the United States if                                  
                  at some time during the taxable year the taxpayer is                                    
                  engaged in business in the United States and the                                        
                  activities of such business consist of any one or more                                  
                  of the following activities carried on, in whole or in                                  






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