- 88 -
because LTD's principal business was not trading in stocks or
securities for its own account and because LTD's principal office
was located outside the United States during each of such years.
Respondent argues that the section 864(b)(2)(A)(ii)
exclusion of trading for the taxpayer's own account does not
apply to any of the transactions in LTD’s financial services
business. Additionally, respondent argues that the exception in
section 1.864-2(c)(2)(iv)(b)(2), Income Tax Regs., is unavailable
because LTD had an office or other fixed place of business in the
United States.
We agree with respondent. In the instant case, LTD was
regularly engaged in purchasing certificates of deposit and term
deposits from U.S. and foreign banks as attorney in fact for its
clients and was regularly engaged in selling evidences of an
interest in such financial instruments with a view to making
profits from such transactions. The certificates of deposit and
term deposits purchased by LTD are "evidences of indebtedness"
and are therefore securities within the meaning of section 1.864-
2(c)(2)(i), Income Tax Regs.16 The interests in IFF and the non-
U.S. certificates of deposit are "interests in evidences of
indebtedness" and are therefore securities within the meaning of
16
See supra note 13.
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