Page:United States Statutes at Large Volume 80 Part 1.djvu/1582

 1546

68A Stat. 277„

73 USC 801-820, 26 Stat. 112.

76 Stat. 1018.

PUBLIC LAW 89-809-NOV. 13, 1966

[80 STAT.

" (i) consists of rents or royalties for the use of or for the privilege of using intangible property described in section 862(a)(4) (including any gain or loss realized on the sale of such property) derived in the active conduct of such trade or business; "(ii) consists of dividends or interest, or gain or loss from the sale or exchange of stock or notes, bonds, or other evidences of indebtedness, and either is derived in the active conduct of a banking, financing, or similar business within the United States or is received by a corporation the principal business of which is trading in stocks or securities for its own account; or "(iii) is derived from the sale (without the United States) through such office or other fixed place of business of personal property described in section 1221(1), except that this clause shall not apply if the property is sold for use, consumption, or disposition outside the United States and an office or other fixed place of business of the taxpayer outside the United States participated materially in such sale. " (C) I n the case of a for e i ^ corporation taxable under P ^ ^ "- ^^ subchapter L, any income from sources without " the United States which is attributable to its United States business shall be treated as effectively connected with the conduct of a traHe or business within the United States. " (D) No income from sources without the United States shall be treated as effectively connected with the conduct of a trade or business within the United States if it either— " (i) consists of dividends, interest, or royalties paid by a foreign corporation in which the taxpayer owns (within the meaning of section 958(a)), or is considered as owning (by applying the ownership rules of section 958 (b)), more than 60 percent of the total combined voting power of all classes of stock entitled to vote, or "(ii) is subpart F income within the meaning of section 962(a). "(5) RULES FOR APPLICATION or PARAGRAPH (4)(B). — For purposes of subparagraph (B) of paragraph (4) — " (A) in determining whether a nonresident alien individual or a foreign corporation has an office or other fixed place of business, an office or other fixed place of business of an agent shall be disregarded unless such agent (i) has the authority to negotiate and conclude contracts in the name of the nonresident alien individual or foreign corporation and regularly exercises that authority or has a stock of merchandise from which he regularly fills orders on behalf of such individual or foreign corporation, and (ii) is not a general commission agent, broker, or other agent of independent status acting in the ordinary course of his business, " (B) income, gain, or loss shall not be considered as attributable to an office or other fixed place of business within the United States unless such office or fixed place of business is a material factor in the production of such income, gain, or loss and such office or fixed place of business regularly carries on activities of the type from which such income, gam, or loss is derived, and " (C) the income, gain, or loss which shall be attributable to an office or other fixed place of business within the United States shall be the income, gain, or loss property allocable thereto, but, in the case of a sale described in clause (iii) of

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