USTB

Question 1

A foreign corporation trading stock in US may be treated as being engaged in trade/business within the US unless:

Answer 1

1. trading is effected through a broker or indep agent

2. trading is for the taxpayer’s own account

Question 2

Is FDAP income from US effectively connected with the conduct of a US trade or business?

Answer 2

1. Assets-use test

2. Business-activities test

Question 3

When is an asset treates as used in or held for use in a business in the US?

Answer 3

If the asset is:
•held for the principal purpose of promoting the present conduct of business in the United States;
•acquired and held in the ordinary course of a U.S. business, for example, in the case of an account receivable arising from the business; or
•otherwise held in a direct relationship to the U.S. business.

Question 4

When is an asset considered held in a direct relationship to a business?

Answer 4

If Generally, an asset is treated as held in the direct relationship to business if:
•the asset was acquired with funds generated by the business,
•income from the asset is retained or reinvested in the business, or
•personnel who are present in the United States and actively involved in the conduct of a business exercise significant management and control over the investment of the asset.