As a general rule, a non-resident alien of a foreign corporation that conducts a U.S. trade...

As a general rule, a non-resident alien of a foreign corporation that conducts a U.S. trade or business will be subject in Internal Revenue Code Section 871(b)(1) and 882(a)(1) to the usual U.S. tax rates on net (i.e. taxable) income. The term “trade or business within the United States” is not defined in the Code. Do the regulations under Section 864 provide additional guidance?

Expert Solution

Trade and businees within the united states doex not include the activities of

1.Trading in stocks and securities

The term “engaged in trade or business within the United States” does not include the effecting of transactions in the United States in stocks or securities through a resident broker, commission agent, custodian, or other independent agent.except that it shall not apply if at any time during the taxable yearthe taxpayer has an office or other fixed place of business in the United States through which, or by the direction of which, the transactions in stocks or securities are effected irrespective of volume of transactions transacted.

Trading for Tax payer's own account

The term “engaged in trade or business within the United States” does not include the effecting of transactions in the United States in stocks or securities for the taxpayer's own account, irrespective of whether such transactions are effected by or through -

(a) The taxpayer himself while present in the United States,

(b) Employees of the taxpayer, whether or not such employees are present in the United Stateswhile effecting the transactions, or

(c) A broker, commission agent, custodian, or other agent of the taxpayer, whether or not such agent while effecting the transactions is (1) dependent or independent, or (2) resident, nonresident, or present, in the United States, and irrespective of whether any such employee or agent has discretionary authority to make decisions in effecting such transactions.

Partnerships. A nonresident alien individual, foreign partnership, foreign estate, foreign trust, orforeign corporation shall not be considered to be engaged in trade or business within the United States solely because such person is a member of a partnership (whether domestic or foreign)

Dealers in stocks or securities and certain foreign corporations.

Trading in commodities

But does not iclude the activities of

the performance of personalservices within the United States at any time within the taxable year except to the extent otherwise provided

Refer to these: part I (section 861 and following) and part II (section 871 and following), subchapter N, chapter 1 of the Code, and chapter 3 (section 1441 and following) of the Code

ekkarill92 answered 1 year ago

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