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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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