- 144 -
economic substance. Such transactions are sham within the
meaning of section 6621(c). Skeen v. Commissioner, 864 F.2d 93,
96 (9th Cir. 1989), affg. Patin v. Commissioner, 88 T.C. 1086
(1987); DeMartino v. Commissioner, 88 T.C. 583 (1987), affd. 862
F.2d 400 (2d Cir. 1988), affd. without published opinion sub nom.
McDaniel v. Commissioner, 862 F.2d 308 (3d Cir. 1988). The
underpayments attributable to those transactions will bear
additional interest, as will any others where petitioners have
not specifically proven that respondent's determination was
erroneous.
IX. Withholding of Tax at the Source
Sections 1441 and 1442 provide for a 30-percent withholding
tax on foreign individuals and corporations as follows:
SEC. 1441. WITHHOLDING OF TAX ON NONRESIDENT ALIENS.
(a) General Rule.-- * * * all persons, in whatever
capacity acting (including lessees or mortgagors of
real or personal property, fiduciaries, employers, and
all officers and employees of the United States) having
the control, receipt, custody, disposal, or payment of
any of the items of income specified in subsection (b)
(to the extent that any of such items constitutes gross
income from sources within the United States), of any
nonresident alien individual or of any foreign
partnership shall (except as otherwise provided in
regulations prescribed by the Secretary under section
874) deduct and withhold from such items a tax equal to
30 percent thereof * * *
(b) Income items.--The items of income referred to
in subsection (a) are interest (other than original
issue discount as defined in section 1273), dividends,
rent, salaries, wages, premiums, annuities,
compensations, remunerations, emoluments, or other
fixed or determinable annual or periodical gains,
profits, and income * * *
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