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TITLE 26-INTERNAL REVENUE CODE office or other fixed place of business within the United States to which such income, gain, or loss is attributable and such income, gain, or loss- (I) consists of rents or royalties for the use of or for the privilege of using intangi- ble property described in section 862(a)(4) (including any gain or loss realized on the sale or exchange of such property) de- rived in the active conduct of such trade or business; (i) 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, financ- ing, 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 (Ili) is derived from the sale or exchange (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 or exchanged for use, consumption, or disposition out- side the United States and an office or other fixed place of business of the tax- payer outside the United States partici- pated materially in such sale or exchange. (C) In the case of a foreign corporation taxable under part I of subchapter L, any income from sources without the United States which is attributable to its United States business shall be treated as effective- ly connected with the conduct of a trade 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 roy- alties paid by a foreign corporation in which the taxpayer owns (within the meaning of section 958(a)), or is consid- ered as owning (by applying the owner- ship rules of section 958(b)), more than 50 percent of the total combined voting power of all classes of stock entitled to vote, or (i) is subpart F income within the meaning of section 952(a). (5) Rules for application of paragraph (4)(B) For purposes of subparagraph (B) of para- graph (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 non- resident alien individual or foreign corpora- tion 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 con- sidered 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 produc- tion 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, gain, 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 or exchange described in clause (1ii) of such paragraph, the income which shall be treat- ed as attributable to an offIce or other fixed place of business within the United States shall not exceed the income which would be derived from sources within the United States if the sale or exchange were made in the United States. (Aug. 16, 1954, ch. 736, 68A Stat. 278; Nov. 13, 1966, Pub. L. 89-809, title I, § 102(d), 80 Stat, 1544; Oct. 4, 1976, Pub. L. 94-455, title XIX, § 1901(a)(113), 90 Stat. 1783.) AMENDMENTS 1976-Subsec. (a). Pub. L. 94-455, §gO1(a)(113)(A), substituted in subsec. catchline "Produced" for "Sale, etc." and struck out in text provisions relating to the definition of sale and sold. Subsec. (c)(4)(B)(i). Pub. L. 94-455, § 190(a)(113)(B), substituted "sale or exchange" for "sale". Subsec. (c)(4)(B)(ii). Pub. L. 94-455, § 1901(a)(113)(B), (C), substituted "sold or exchanged" for "sold" and "sale or exchange" for "sale" wherever appearing. Subsec. (c)(5)(C). Pub. L. 94-455, § 1901(a)(113)(B), substituted "sale or exchange" for "sale" wherever ap- pearing. 1966-Pub. L. 89-809 designated existing provisions as subsec. (a) and added subsecs. (b) and (c). EFFECTIvE DATE OF 1976 AMENDMENT Amendment of section by Pub. L. 94-455 effective for taxable years beginning after Dec. 31, 1976, see sec- tion 1901(d) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 2 of this title. EFFECTIVE DATE OF 1966 AMENDMENT Amendment by Pub. L. 89-809 applicable with re- spect to taxable years beginning after Dec. 31, 1966, except that in applying section 864(c)(4)(B)(III) of this title with respect to a binding contract entered into on or before Feb. 24, 1966, activities in the United States on or before such date in negotiating or carrying out such contract shall not be taken into account, see sec- tion 102(e)(1) of Pub. L. 89-809, set out as an Effective Date of 1966 Amendment note under section 861 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 871 of this title. PART II-NONRESIDENT ALIENS AND FOREIGN CORPORATIONS Subpart A. Nonresident alien individuals. B. Foreign corporations. C. Miscellaneous provisions. § 864 Page 561