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client. The San Antonio office was the place where LTD client
files were maintained. LTD's use of the San Antonio office for
both its operations and as a return address was so extensive that
we believe, taking into account the overall needs and conduct of
LTD’s trade or business, that LTD’s use of the San Antonio office
cannot be described as falling under the "relatively sporadic or
infrequent" exception. Sec. 1.864-7(b)(2), Income Tax Regs.
Moreover, LTD has not shown that it maintained any other fixed
facility through which it engaged in its activities.
Accordingly, we hold that the San Antonio office was LTD’s fixed
facility in the United States during the years in issue for
purposes of section 1.864-7(b), Income Tax Regs.
As to the location of the management activity, section
1.864-7(c), Income Tax Regs., and related examples, section
1.864-7(g), Examples (1)-(3), Income Tax Regs., take into account
not only where the "top management decisions" are made but also
where "the day-to-day trade or business of the foreign
corporation" is conducted. LTD’s day-to-day trade or business
was to provide its Mexican clients with access to non-Mexican
financial markets. That day-to-day trade or business was
conducted in the San Antonio office, where the clients’ files
were located, investment instructions were received and carried
out, client statements were produced, and LTD’s daily proof
sheets and journal vouchers were produced.
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