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additions to tax as determined by respondent herein, each payor
in the chain might well feel compelled to file returns and pay
withholding taxes. See Glicklich, "Final Regulations on Conduit
Financing Arrangements Empower the IRS", 84 J. Taxn. 5, 12
(1996). We are not disposed to conclude, in the absence of any
legislative expression on the subject, that Congress intended the
statutory provisions to permit "cascading" with the question of
relief left to the mercy of respondent.
We hold that the payments by petitioner with respect to
which respondent seeks to impose liability for the 30 percent
withholding tax herein were not "received from sources within the
United States by" SDI Bermuda under sections 881(a), 1441(a), and
1442(a).17
Decision will be entered
for petitioner.
17 We note that changes in the U.S.-Netherlands treaty,
applicable to years subsequent to the years before us, may
provide a different framework for disposing of this issue.
Convention for the Avoidance of Double Taxation, U.S.-Neth.,
Dec. 18, 1992, Tax Treaties (CCH) par. 6103.01, as amended by
Supplementary Protocol, Oct. 13, 1993, Tax Treaties (CCH) par.
6116.
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