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Commissioner, 105 T.C. 341, 350 (1995), on appeal (7th Cir.,
March 13 and 25, 1996); Halliburton Co. v. Commissioner, 100 T.C.
216, 232 (1993), affd. without published opinion 25 F.3d 1043
(5th Cir. 1994).
At this point, we note that respondent has not argued that
petitioner was a mere conduit or agent of SDI USA in paying
royalties to SDI Bermuda or that SDI Bermuda was the beneficial
owner of the royalties petitioner received from SDI USA so that
the U.S.-Netherlands treaty exemption should not apply. Compare
Aiken Industries, Inc. v. Commissioner, 56 T.C. 925 (1971), with
Northern Indiana Public Service Co. v. Commissioner, supra; cf.
Estate of Petschek v. Commissioner, 81 T.C. 260 (1983), affd. 738
F.2d 67 (2d Cir. 1984). Presumably such an argument would have
produced a situation where SDI USA rather than petitioner would
have been targeted by respondent as the taxpayer liable for the
withholding tax under section 1442(a).15 See Northern Indiana
Public Service Co. v. Commissioner, 105 T.C. at 347.
Although Aiken Industries, Inc. v. Commissioner, supra, and
Northern Indiana Public Service Co. v. Commissioner, supra,
15 Given the basis for our disposition of this case, we have no
need to deal with the question whether petitioner, even though
only a conduit, would meet the statutory requirements of a
withholding agent. See sec. 1.1441-7, Income Tax Regs., which
provides that a foreign corporation can be a withholding agent.
See also Fides v. Commissioner, 137 F.2d 731 (4th Cir. 1943),
affg. 47 B.T.A. 280 (1942); Gaw v. Commissioner, T.C. Memo. 1995-
531, on appeal (D.C. Cir., May 20, 1996).
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