Traditions is a long established, family-owned company organized and operated in a West African country to purchase art objects produced by artists and craftsmen in West Africa and sell them to tourists visiting the country. Traditions has never sold such objects in the United Stated. However, the scion of the family has recently returned to the home office of Traditions after completing study in the United States that included courses in sales and marketing. He has convinced his family that West African art could generate big volume sales at substantial profit in many of the chic stores in the US.

Members of the family have invited US department store buyers to the home office e to discuss the potential market for West African art in the US. As a result of these discussions, the family has determined to start exporting art to the US, aiming at substantial sales to a limited number of store (20 or 25). Consider whether it matters if the title to the art objects passes outside or within the US. The only income taxes imposed in Traditions' home country are on oil production and mining. The family have become quite accustomed to receiving its income without fiscal erosion and would like to keep it that way. They are considering the possibility below:

(a) Have Traditions establish a shop on 5th Ave in New York that would maintain a modest inventory. The shop would sell directly to customers, fill orders by mail, fax, or on the Internet received from customers in certain Central and South American countries and accept orders from customers in Asian countries that would be forwarded and filled by shipments directly from the home office to the customers. All sales would be under commercial terms prescribed by the home office. However, employees in New York would have the power to decide whether or not to accept and fill all orders.

How would the answer change if Traditions also hired craftsmen as employees to produce art objects for the corporation at its headquarters?