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for the purpose of earning income or profit, and the
activities included in such group include every
operation that forms a part of, or a step in, the
process of earning income or profit. Such group of
activities ordinarily must include the collection of
income and the payment of expenses.
(iii) Active conduct. For purposes of
section 355(b), the determination whether a trade or
business is actively conducted will be made from all of
the facts and circumstances. Generally, the
corporation is required itself to perform active and
substantial management and operational functions.
Generally, activities performed by the corporation
itself do not include activities performed by persons
outside the corporation, including independent
contractors. A corporation may satisfy the
requirements of this subdivision (iii) through the
activities that it performs itself, even though some of
its activities are performed by others. * * *
(iv) Limitations. The active conduct of
a trade or business does not include–
(A) The holding for investment
purposes of stock, securities, land, or other property,
or
(B) The ownership and operation
(including leasing) of real or personal property used
in a trade or business, unless the owner performs
significant services with respect to the operation and
management of the property.
Third, for purposes of section 367, the Secretary prescribed
in section 1.367(a)-2T(b), Temporary Income Tax Regs., 51 Fed.
Reg. 17942 (May 16, 1986), the following relevant rules as to the
phrase’s meaning:
(b) Active conduct of a trade or business outside
the United States--(1) In general. Property qualifies
for the exception provided by this section if it is
transferred to a foreign corporation for use in the
active conduct of a trade or business outside of the
United States. Therefore, to determine whether
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