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Applying the foregoing regulations to the facts of the
instant case, we note that, although INC was, either directly or
indirectly, a wholly owned subsidiary of LTD, section 1.864-
7(d)(3)(ii), Income Tax Regs., requires the determination of
whether INC is an independent agent to be made without regard to
the fact that LTD "owns or controls directly or indirectly" INC.
Accordingly, we disregard the fact that LTD owned, either
directly or indirectly, all of INC in our consideration of
whether INC was "a general commission agent, broker, or other
agent of an independent status acting in the ordinary course of *
* * [its] business in that capacity." Sec. 1.864-7(d)(3)(i),
Income Tax Regs.
INC was an investment adviser registered with the SEC.
INC’s business, in part, was that of a broker of certificates of
deposit. Guided by Inver Group’s criteria, INC researched and
selected the financial institutions from which it purchased
certificates of deposit for LTD and LTD’s clients. INC performed
brokerage services for LTD and LTD’s clients. INC, however,
acted almost exclusively for one principal, i.e., LTD, which is a
foreign corporation. Consequently, we conclude that INC is an
"exclusive" agent within the meaning of section 1.864-
7(d)(3)(iii), Income Tax Regs., supra. Accordingly, we must take
into account the facts and circumstances "in determining whether
the agent, while acting in that capacity, may be classified as an
independent agent." Sec. 1.864-7(d)(3)(iii), Income Tax Regs.
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