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or business within the United States "shall be determined on the
basis of the facts and circumstances in each case." Id.
Accordingly, pursuant to section 1.864-2(e), Income Tax
Regs., we apply the relevant case law, which provides tests
regarding the amount of activity that is required for a
conclusion that a taxpayer is engaged in "trade or business
within the United States" pursuant to section 864(b). Finding no
cases addressing the term "trade or business within the United
States" as used in section 864(b), we turn to the cases
interpreting the statutory precursors of section 864 and section
882(a).
In European Naval Stores Co., S.A. v. Commissioner, 11 T.C.
127 (1948), the Court addressed whether the taxpayer, a foreign
corporation, was “engaged in trade or business within the United
States” within the meaning of section 231(b) of the 1939 Code, as
amended. In interpreting former section 231(b), the Court held
that the "question as to what activities of a taxpayer constitute
the carrying on of a business is one of fact." Id. at 132
(citing Higgins v. Commissioner, 312 U.S. 212 (1941), which
interpreted the phrase "carrying on any trade or business" within
the meaning of section 23(a) of the Revenue Act of 1932 (a
precursor of section 162(a))). The Court in European Naval
Stores indicated that the phrase "engaged in trade or business
within the United States" refers to profit-seeking activities
that are sufficiently regular, continuous, and extensive to
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