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States" so that no withholding is required under section 1442(a).
Pertinent authority on the issue before us is sparse.
Indeed respondent relies solely on Rev. Rul. 80-362, 1980-2 C.B.
208, for her "flow-through" position. In Rev. Rul. 80-362, A, a
resident of a country other than the United States and The
Netherlands, licensed the rights to a U.S. patent to X, a
Netherlands corporation. X agreed to pay a fixed royalty each
year to A. X relicenses those rights to Y, a U.S. corporation,
for use in the United States. In ruling that X was liable for a
withholding tax under section 1441, the ruling states:
In the present factual situation, the royalties
from Y to X are exempt from United States tax under
Article IX(1) of the Convention. However, the royalties
from X to A are not exempt from taxation by the United
States because there is no income tax convention
between A's country of residence and the United States
providing for such an exemption. Since the royalties
from X to A are paid in consideration for the privilege
of using a patent in the United States, they are
treated as income from sources within the United States
under section 861(a)(4) of the Code and are subject to
United States income taxation under section
871(a)(1)(A). [Rev. Rul. 80-362, 1980-2 C.B. at 208-
209.]
We are not persuaded that Rev. Rul. 80-362, supra, provides
any significant support for respondent's position herein. It
fails to reflect any reasoning or supporting legal authority.
This circumstance is particularly relevant in applying the usual
rule that, in any event, revenue rulings are not entitled to any
special deference. See Northern Indiana Public Service Co. v.
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