- 97 -
Id. at 51. The trusts’ office in the United States was advised
of the purchases and sales executed by the resident brokers "so
that it would make the proper entries on its books." Id. at 56.
Unlike the trusts in Scottish American, LTD did not use
independent resident brokers to effect transactions in securities
for its own account during the years in issue. Rather, LTD’s
business consisted primarily of trading for its clients’ accounts
through transactions effected by its wholly owned subsidiary INC
at the latter’s office in the United States. In sum, we conclude
that Scottish American is not dispositive of the instant case.
Consequently, we conclude that case law does not allow LTD to
exclude any of its trading activities from the consideration of
whether it was engaged in "trade or business within the United
States" pursuant to section 864(b).
One final inquiry into the issue of whether LTD was engaged
in "trade or business within the United States" remains.
Although LTD’s trading activities are not eligible for exclusion
from "the performance of personal services" for purposes of
section 864(b), LTD is not automatically deemed to be engaged in
"trade or business within the United States." Sec. 1.864-2(e),
Income Tax Regs. The fact that a party "is not determined by
reason of this section to be not engaged in trade or business
within the United States is not to be considered a determination
that such person is engaged in trade or business within the
United States." Id. Whether such a person is engaged in trade
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