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Section 1.864-4(c)(5)(i), Income Tax Regs., dealing with
foreign sources of income, describes those activities that are
indicative of banking, financing, and similar businesses, as
follows:
(i) Definition of banking, financing, or similar business.--
* * * * * * *
(a) Receiving deposits of funds from the public,
(b) Making personal, mortgage, industrial, or other
loans to the public,
(c) Purchasing, selling, discounting, or negotiating
for the public on a regular basis, notes, drafts, checks,
bills of exchange, acceptances, or other evidences of
indebtedness,
(d) Issuing letters of credit to the public and
negotiating drafts drawn thereunder,
(e) Providing trust services for the public, or
(f) Financing foreign exchange transactions for the
public.
The above description of the business of banking and finance --
originally contained in the foreign tax credit regulations of
section 904 (sec. 1.904-4(c)(1), Income Tax Regs.) -- applies
generally to CFC’s for purposes of the “same or similar activity”
requirement of the TAMRA section 952 chain deficit rule. See S.
Rept. 100-445, at 275-276 (1988).
Petitioners argue, among other things, that employees of
Stanford Financial were involved on behalf of Guardian Bank, in
bank management, the filing of bank regulatory compliance
reports, and other duties incidental, necessary, and similar to
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