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the contract would be performed in the United States. Respondent
argues that under the regulations, income is fixed when it is to
be paid in amounts definitely predetermined, and determinable
whenever there is a basis of calculation by which the amount may
be ascertained. Secs. 1.1441-2(a)(1) and (2), Income Tax Regs;
see also sec. 1.881-2(b), Income Tax Regs. The decision here to
allocate the contract for research and development was
consistently made by A-Alpha during a tax year of the limited
partnerships that was later than the year of payment by the
limited partnerships.
Respondent argues that in instances like the present case
where it is not yet determinable what portion of a payment is
subject to withholding, the regulations provide that the
withholding agent should withhold on the entire amount, and the
payee can then apply for a refund.13 Specifically, section
1.1441-3(d), Income Tax Regs., provides that where the
withholding agent does not know the amount of recognized gain, he
is required to deduct and withhold an amount sufficient to ensure
that not less than 30 percent of the recognized gain is taxed.
This treatment is limited to amounts described in section 1.1441-
2(b)(2), Income Tax Regs, which enumerates certain income items
subject to the 30-percent withholding. None of the categories of
13 This argument is at odds with respondent's argument that
withholding was only required in the portion of the contract
performed in the United States.
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