Problems African art Traditions, Ltd, (“Traditions”) a long-established, family-owned company organized and operated in a West African country to

the United States.

Member of the family US department store buyers to the home office to discuss the potential market for West African arts in the United States. As a result of these discussions, the family has determined to start exporting art to the United States, aiming at substantial sales to a limited number of stores (20 or 25). They are considering a number of possibilities:

Have no representation in the United States. Sell only to US department store buyers who visit the or other countries in the region where Traditions has agents. In additions, sell to US buyers who order by phone, fax, mail or on the Internet.

Traditions visit the United States annually for three or four to travel throughout the country promoting and selling the art to department stores and accepting orders, which would be forwarded for approval to the Traditions home office. Traditions would have no warehouse, office or other fixed place of business in the United States. Art would be shipped from the home office directly to the customer.

Have a permanent sales office, but no warehouse, in the United States staffed with Traditions personnel. Art objects would be shipped from the home office directly to the customer.

Have Traditions set up no sales office in the United States, but retain under contract an independent sales agent that has a US office and employees who will organize marketing efforts and conduct sales campaigns in the United States.

Authorize an independent sales agent, in addition to the activities described in d, to solicit, negotiate and accept orders for art in the name and on behalf of Traditions.

shop on Fifth Avenue in New York what would maintain a modest inventory. The shop would sell directly to customers, fill orders by mail, fax or on the Internet received from in certain Central and South American

accept orders from customers in Asian countries that would be forwarded to and filled by shipment directly from the home office to the customers. All sales would be under commercial terms prescribed by the home office. However, employees in the New York would have the power to decide whether or not to accept and fill all orders.

Traditions would much prefer to operate under a, but business exigencies may dictate the use of one of the other methods. In each case consider whether it to analysis if the title to the art objects passes outside or within the United States. You have been retained primarily to offer US tax advice. The only income tax imposes in Traditions’ home country are on oil production and mining. The family has become quite accustomed to receiving its income without fiscal erosion and would like to keep it that way. Advise them.

How, if at all, would answers in Problem 1 be modified if traditions also hired craftsmen as employees to produce art objects the corporation at its Headquarters?