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Question: In connection with a US real estate development corporation ("DEVELCO"), that develops and sells condos in Tampa, Florida, primarily to buyers from countries in South America, Richard, the CEO of DEVELCO, meets with a South American realtor, Pedro Paez, at the home office of DEVELCO in Tampa. Richard shows the development to Pedro, discusses sales terms and options with Pedro, and Richard and Pedro sign an agreement in Tampa whereby Pedro, while home in South America, will meet with potential South American buyers and will familiarize those prospects with condo options, sales and financing terms, etc. In consideration for Pedro's efforts in South America, DEVELCO agrees to pay Pedro a 6% commission with respect to any buyer coming as a referral from Pedro. The commission paid by DEVELCO to Pedro will be: Group of answer choices Subject to the US gross or flat 30% income tax Subject to US income tax at net rates as effectively connected income US income tax free Subject to US income tax only if the real estate closing takes place in Tampa
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