- 83 -
employees of its own in the San Antonio office, we do not apply
the factor of employee activity. Sec. 1.864-7(e), Income Tax
Regs.
Finally, section 1.864-7(f), Income Tax Regs., provides that
the fact that a foreign corporation is related in some manner to
another person who has an office or other fixed place of business
will not of itself mean that the related person’s office or other
fixed place of business is the foreign corporation’s office or
other fixed place of business unless the facts and circumstances
show that the foreign corporation is engaged in trade or business
in the United States through such office or fixed place of
business. Based on the record in the instant case, we conclude
that the facts and circumstances show that LTD was engaged in
trade or business in the United States through INC’s office in
San Antonio. As we have discussed, supra pp. 72-73, LTD's
involvement and activities in the San Antonio office were
extensive, continuous, and regular. Moreover, LTD has not shown
that it maintained any other office or fixed place of business.
Accordingly, we conclude that the San Antonio office of INC is
the office or other fixed place of business of LTD for purposes
of section 1.864-7(f), Income Tax Regs.
Pursuant to section 1.864-7(a)(2), Income Tax Regs., we have
given "due regard" to the facts and circumstances of the instant
case, "particularly to the nature of the taxpayer's trade or
business and the physical facilities actually required by the
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