- 90 -
Regs.18 Consequently, we hold that LTD’s securities trading is
not excluded pursuant to section 864(b)(2)(a)(ii) from the
determination of whether LTD was engaged in "trade or business
within the United States" pursuant to section 864(b).
Petitioners also argue that all of the activities that LTD
performed are excluded by case law from the consideration of
whether LTD was engaged in "trade or business within the United
States" within the meaning of section 864(b). Petitioners argue
that, "as a matter of law, the fact that INC was or was not a
dependent agent of LTD, or that its offices were or were not
LTD’s offices, is largely irrelevant." Petitioners contend that
"Whether or not INC was independent will not determine whether
LTD engaged in trade or business within the United States".
Relying on Scottish Am. Inv. Co., Ltd. v. Commissioner, 12 T.C.
49 (1949), petitioners argue that the law concerns itself with
the "character and purpose" of the U.S. activities.
Respondent contends that, pursuant to the facts and
circumstances test of section 1.864-2(e), Income Tax Regs., LTD
was engaged in trade or business within the United States.
Respondent contends that the test for determining if a taxpayer
18
We hold in the instant case that the exception of certain
dealers contained in sec. 1.864-2(c)(2)(iv)(b)(2), Income Tax
Regs., does not apply because LTD had "an office or other fixed
place of business in the United States through which, or by the
direction of which, the transactions in stocks or securities are
effected" within the meaning of sec. 1.864-2(c)(2)(iv)(b), Income
Tax Regs. See supra pp. 79, 84.
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