SDI Netherlands B.V., f.k.a. SDI International B.V. - Page 15

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                Section 881(a) provides that a 30-percent tax shall be                       
          imposed on "the amount received from sources within the United                     
          States by a foreign corporation" falling within certain                            
          categories of income.12  Section 1442 provides a method for                        
          collecting that tax.  Central de Gas de Chihuahua, S.A. v.                         
          Commissioner, 102 T.C. at 519.                                                     
                Section 1442 provides in part:                                               
                     (a) General Rule.-- In the case of foreign                              
                corporations subject to taxation under this subtitle,                        
                there shall be deducted and withheld at the source in                        
                the same manner and on the same items of income as is                        
                provided in section 1441 a tax equal to 30 percent                           
                thereof.  * * *                                                              
                Royalties are among the types of income included in section                  
          1441(b).  Sec. 1.1441-2(a), Income Tax Regs.; see also sec.                        
          1.881-2(b), Income Tax Regs.  In addition, section 861(a)(4)                       
          provides that U.S. source income includes:                                         
                     (4) Rentals and Royalties.--Rentals or royalties                        
                from property located in the United States or from any                       
                interest in such property, including rentals or                              
                royalties for the use of or for the privilege of using                       
                in the United States patents, copyrights, secret                             
                processes and formulas, good will, trade-marks, trade                        
                brands, franchises, and other like property.                                 
                Section 1441(a) completes the picture of the statutory                       
          provisions involved herein.  It provides:                                          



          12  A "foreign" corporation is a corporation that is not created                   
          or organized in the United States or under the law of the United                   
          States or of any State.  Sec. 7701(a)(4) and (5).                                  




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