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independent custodian, or some other independent agent.
The record shows that LTD engaged in the trading of
securities through a resident broker by virtue of its
certificates of deposit operation.13 The Inver Group established
criteria to guide INC in selecting the financial institutions
from which INC could purchase certificates of deposit for LTD and
LTD’s clients. INC researched the financial institutions using
the Inver Group’s criteria and obtained interest rate quotes.
Upon receipt of funds and an order to invest, INC placed the
funds in certificates of deposit in either the client’s or LTD’s
name. We conclude that, by engaging in such activities, LTD
engaged in trading in securities through its agent INC.
Section 1.864-7, Income Tax Regs., provides a definition of
"independent agent" for purposes of determining whether a foreign
corporation has "an office or other fixed place of business
within the United States" within the meaning of section
864(c)(4)(B) and the regulations thereunder. The phrase "office
or other fixed place of business in the United States" also
appears in section 864(b)(2)(C). Although the regulation does
not expressly provide that it is to apply for purposes of section
13
Sec. 1.864-2(c)(2)(i), Income Tax Regs., defines a security
for purposes of par. (c) of sec. 1.864-2, Income Tax Regs., as:
"any note, bond, debenture, or other evidence of indebtedness, or
any evidence of an interest in or right to subscribe to or
purchase any of the foregoing."
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