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864(b)(2)(A)(i), we believe that the regulation furnishes a
proper framework for interpreting the term "independent agent"
for purposes of section 864(b)(2)(A)(i).
Section 1.864-7(d)(3)(i), Income Tax Regs., provides:
For purposes of this paragraph * * * [of the
regulation], the term “independent agent” means a general
commission agent, broker, or other agent of an independent
status acting in the ordinary course of his business in that
capacity. Thus, for example, an agent who, in pursuance of
his usual trade or business, and for compensation, sells
goods or merchandise consigned or entrusted to his
possession, management, and control for that purpose by or
for the owner of such goods or merchandise is an independent
agent.
Section 1.864-7(d)(3)(ii), Income Tax Regs., however, provides:
The determination of whether an agent is an independent
agent for purposes of this paragraph shall be made without
regard to facts indicating that either the agent or the
principal owns or controls directly or indirectly the other
or that a third person or persons own or control directly or
indirectly both. For example, a wholly owned domestic
subsidiary corporation of a foreign corporation which acts
as an agent for the foreign parent corporation may be
treated as acting in the capacity of independent agent for
the foreign parent corporation. The facts and circumstances
of a specific case shall determine whether the agent, while
acting for his principal, is acting in pursuance of his
usual trade or business and in such manner as to constitute
him an independent agent in his relations with the
nonresident alien individual or foreign corporation.
Finally, section 1.864-7(d)(3)(iii), Income Tax Regs., provides:
Where an agent who is otherwise an independent agent
within the meaning of subdivision (i) of this subparagraph
acts in such capacity exclusively, or almost exclusively,
for one principal who is a nonresident alien individual or a
foreign corporation, the facts and circumstances of a
particular case shall be taken into account in determining
whether the agent, while acting in that capacity, may be
classified as an independent agent.
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