connected with the conduct of a trade or business within the United States. Royalties,
whether paid in one lump sum or periodically, constitute FDAP. Commissioner v.
Wodehouse, 337 U.S. 369, 392 (1949); see also §§ 1.871-7(b)(1) and 1.1441-2(b).
Section 1441(a) provides the general rule that all payors having the control,
receipt, custody, disposal or payment of items described in § 1441(b) must deduct and
withhold a tax equal to 30 percent on payments of certain items of income to
nonresident aliens to the extent that such items constitute gross income from sources
within the United States. Section 1441(b) provides that these items of income include
interest, dividends, rent, salaries, wages, premiums, annuities, compensations,
remunerations and emoluments or other fixed or determinable annual or periodical
gains, profits, and income. Section 1442(a) provides that, in the case of foreign
corporations subject to taxation under subtitle A of the Code, there shall be deducted
and withheld at the source in the same manner and on the same items of income as is
provided in § 1441 a tax equal to 30 percent thereof.
Section 861(a)(4) provides that rentals or royalties from property located in the
United States or from any interest in such property, including rentals or royalties for the
use of or for the privilege of using in the United States patents, copyrights, secret
processes and formulas, good will, trade marks, trade brands, franchises, and other like
property, shall be treated as income from sources within the United States.
Section 862(a)(4) provides that rentals or royalties from property located without
the United States or from any interest in such property, including rentals or royalties for
the use of or for the privilege of using without the United States patents, copyrights,