- 6 -
section 59(a)(2). After a detailed analysis of the legislative
history of the relevant code sections, this Court concluded that,
while section 59(a)(2) conflicted with the treaty provision,
"when a treaty and an act of Congress conflict 'the last
expression of the sovereign will must control'." Lindsey v.
Commissioner, supra at 676, (quoting Chae Chan Ping v. United
States (Chinese Exclusion Case), 130 U.S. 581, 600 (1889)).
The U.S-Canada Treaty became effective on August 16, 1984.
Section 59(a)(2) was enacted into law as part of the Tax Reform
Act of 1986, Pub.L. 99-514, sec. 701(a), 100 Stat. 2085, 2336-
2337. This enactment was subsequent to the ratification of the
U.S.-Canada Treaty. Therefore, pursuant to Lindsey v.
Commissioner, supra, the U.S.-Canada Treaty must yield to the
application of section 59(a)(2). Section 59(a)(2) is the last
expression of the sovereign will. Accordingly, notwithstanding
the U.S.-Canada Treaty, petitioners are subject to the
limitations of section 59(a)(2).4
4 The use of this "later-in-time" rule is supported by
provisions of the Technical & Miscellaneous Revenue Act of 1988
(TAMRA), Pub. L. 100-647, 102 Stat. 3342, 3531. See Lindsey v.
Commissioner, 98 T.C. 672, 676-677 (1992). Pursuant to TAMRA,
these provisions as enacted on Nov. 10, 1988, are effective for
tax years beginning in 1987 and thereafter. See sec. 1012(aa)(4)
of TAMRA. Since the year at issue in this case is 1987, the
provisions are applied retroactively to petitioner. The Court
finds that this period of retroactivity is a modest one and does
not violate petitioner's right of due process. Tate & Lyle v.
Commissioner, 103 T.C. 656, 675 (1994) (quoting U.S. v. Carlton,
512 U.S. ___, ___, 114 S. Ct. 2018, 2022 (1994)).
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