¹Statement by the Cross Industry Working Team of the Corporation for National Research Initiatives; see www.cnri.reston.va.us.

²U.S. Treasury Department, Discussion Paper, Selected Tax Policy Implications of Global Electronic Commerce, Section I (11/21/96).

³Id. at Section III, 6.2.

⁴See note 2, supra.

⁵Income source is also relevant in determining the extent of a U.S. individuals foreign-earned income exclusion under Sec. 911 and the allowable deductions attributable to a foreign sales corporation or a domestic international sales corporation.

⁶See, e.g., The Doctor Will See You NowJust Not in Person, Business Week 117 (10/3/94).

⁷In fact, the Organisation for Economic Cooperation and Developments (OECDs) Technical Advisory Group on Treaty Characterization of Electronic Commerce Payments, identified no less than 26 common e-commerce transactions; see OECD Technical Advisory Group Issues Final Report on E-Commerce Taxation, 2001 TNT 25-7 (2/5/01).

⁸Inventory includes personal property held by a taxpayer primarily for sale to customers in the ordinary course of business, according to Secs. 865(i)(1) and 1221(1).

⁹This assumes that tax avoidance was not the primary purpose for arranging title passage in a particular jurisdiction, in which case all factors of the transaction are taken into account; the sale is treated as having been consummated where the substance of the sale occurs.

¹⁰Sec. 864(c) provides some guidance as to a fixed place of business for Sec. 865(e)(2) purposes.

¹¹Regs. Sec. 1.861-18(b)(1)(iii) and (iv) also provide sourcing rules for the provision of (1) services to develop or modify the computer program and (2) know-how as to computer programming techniques. These rules are not discussed, because they are less relevant to the determination of sourcing e-commerce transactions.

¹²Under Secs. 861(a)(6) and 862(a)(6), income from the sale of inventory is sourced to the jurisdiction where title passes to the transferred property. Under Sec. 865, the sale of tangible personal property is sourced according to the sellers residence.

¹³See note 2 supra, at Section III, 6.2.

¹⁴Rights to use such a product are referred to as shrink-wrap license; the product is canned software.

¹⁵None of the rights enumerated in Regs. Sec. 1.861-18(c)(2)(i)(iv) are transferred to the buyer, thereby making the transaction a transfer of a copyrighted article under Regs. Sec. 1.861-18(f)(2).

¹⁶This assumes all substantial rights in the copyright have not been transferred. Absent any treaty provisions, Secs. 861(a)(4) and 862(a)(4) apply, making the royalties U.S.-source income, because the copyrighted article will be used in the U.S.