1. Dickens, a citizen and resident of the United Kingdom,occasionally purchases and sells securities on the New York andAmerican Stock Ex¬changes. He effects his transactions through astockbroker in New York City, who is instructed by telephone fromLondon. During the tax year, Dickens made 20 purchases and 15sales. He received dividends during the year of $30,000 from hisshares. He realized gains of $200,000 and losses of $100,000 fromtransactions involving the shares. Dickens wishes to know theextent of any U.S. income tax liability. Advise him.
2. In Problem 1 would Dickensâ U.S. taxes be reduced ifhe had realized losses of $230,000?
3. The broker in Problem 1 has recently suggested thatDickens give him discretionary authority to buy and sell âtoexploit fast-breaking market conditions.â Would such an arrangementaffect your earlier responses?
4. Carlson, a citizen and resident of Denmark, is acommodities dealer operating in Copenhagen. During the tax year,Carlson, by e-mail from her home office, purchased several carloadsof wheat. She took title to the wheat in Minneapolis. The wheat wassold to the government of India, FOB New York City, where the wheatwas placed aboard a Liberian flag vessel. Carlson has never been tothe United States. While she has occasionally purchased U.S.commodities in the past, this is her sole transaction in the UnitedStates during the current year. Does she have any potential U.S.income tax liability?
5. Rosario, a corporation organized in Argentina, sellsconsumer prod¬ucts to retailers in the main cities of that country.Rosario has no office in the United States. Rosario salesrepresentatives in Argentina send orders to a purchasing agent inNew York. The purchasing agent purchases the products from U.S.manufacturers in Rosarioâs name. The products are shipped to Miamiand delivered to vessels bound for Argentina. Orders are acceptedin Argentina. Title to the goods is transferred to customers at theport of destination. However, the customers have agreedcontractually to insure against all losses attributable toshipwreck, fire and accident while the goods are in transit. TheArgentine customers make payment to an account maintained byRosario in Switzerland. Does Rosario have any liability for U.S.taxes? Would your answer differ if the purchasing agent is properlycharacterized as an âindependent agentâ?
1. Dickens, a citizen and resident of the United Kingdom,occasionally purchases and sells securities on the New York andAmerican Stock Ex¬changes. He effects his transactions through astockbroker in New York City, who is instructed by telephone fromLondon. During the tax year, Dickens made 20 purchases and 15sales. He received dividends during the year of $30,000 from hisshares. He realized gains of $200,000 and losses of $100,000 fromtransactions involving the shares. Dickens wishes to know theextent of any U.S. income tax liability. Advise him.
2. In Problem 1 would Dickensâ U.S. taxes be reduced ifhe had realized losses of $230,000?
3. The broker in Problem 1 has recently suggested thatDickens give him discretionary authority to buy and sell âtoexploit fast-breaking market conditions.â Would such an arrangementaffect your earlier responses?
4. Carlson, a citizen and resident of Denmark, is acommodities dealer operating in Copenhagen. During the tax year,Carlson, by e-mail from her home office, purchased several carloadsof wheat. She took title to the wheat in Minneapolis. The wheat wassold to the government of India, FOB New York City, where the wheatwas placed aboard a Liberian flag vessel. Carlson has never been tothe United States. While she has occasionally purchased U.S.commodities in the past, this is her sole transaction in the UnitedStates during the current year. Does she have any potential U.S.income tax liability?
5. Rosario, a corporation organized in Argentina, sellsconsumer prod¬ucts to retailers in the main cities of that country.Rosario has no office in the United States. Rosario salesrepresentatives in Argentina send orders to a purchasing agent inNew York. The purchasing agent purchases the products from U.S.manufacturers in Rosarioâs name. The products are shipped to Miamiand delivered to vessels bound for Argentina. Orders are acceptedin Argentina. Title to the goods is transferred to customers at theport of destination. However, the customers have agreedcontractually to insure against all losses attributable toshipwreck, fire and accident while the goods are in transit. TheArgentine customers make payment to an account maintained byRosario in Switzerland. Does Rosario have any liability for U.S.taxes? Would your answer differ if the purchasing agent is properlycharacterized as an âindependent agentâ?
