Inverworld, Inc., et al. - Page 222

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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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