In Adams Challenge (UK) Ltd. v. Commissioner, (T.C. 2020), the Tax Court found that a company incorporated in the U.K. was engaged in a trade or business in the U.S. pursuant to § 882(a)(1) of the Internal Revenue Code (IRC). Petitioner had contracted with a third party to provide a marine vessel and crew to support the decommissioning of oil and gas wells on portions of the U.S. Outer Continental Shelf. Because the petitioner’s income arose from the use of property and the performance of services in the United States, the company was taxable under the IRC.

Tax Foresight correctly predicted that this charter activity constituted a trade or business in the U.S. The prediction was based on several factors, including: 

  • The activities within the United States included providing a service to a third party which was not merely incidental to a transaction, 

  • The main activities at issue were carried out more than five times during the taxable year within the United States, and

  • The main activities were carried on within the United States by the taxpayer’s agents in more than one taxable year.

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