Inverworld, Inc., et al. - Page 13

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          Petitioners argue in their motion that, because INC’s role in the           
          currency exchange transactions was "as a bookkeeper only", such             
          bookkeeping activities do not constitute, as to LTD's trade or              
          business, "a material factor in the realization of the income"              
          within the meaning of section 864(c)(2)(B).  We do not agree.               
          Petitioners do not argue that INC rendered no services with                 
          respect to LTD's currency exchange transactions.  Accordingly, we           
          conclude that petitioners' characterization of INC's activities             
          as mere bookkeeping does not preclude our holding that, as to               
          LTD's trade or business, such activities were a material factor             
          in the realization of the currency exchange transactions income.            
               In deciding whether the activities of LTD's trade or                   
          business, as carried out on its behalf by INC, were a material              
          factor in the realization of LTD's currency exchange transactions           
          income, we consider whether LTD's income was accounted for                  
          through LTD's trade or business under all of the circumstances.             
          See sec. 864(c)(2).  The activities of LTD's trade or business              
          relating to the currency swap income included contacting Bank of            
          America and United States Trust for exchange rates and arranging            
          the swaps with those institutions.  The activities of LTD’s trade           
          or business relating to the currency transactions income included           
          effecting the exchange of currencies by depositing or withdrawing           
          dollars or pesos, and maintaining records of LTD’s and its                  
          clients’ positions with respect to such currency transactions.              
          As to such income, we conclude that the activities of LTD's trade           




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