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(Canadian Convention), override section 842(b), which requires a
foreign company conducting an insurance business in the United
States to treat a minimum amount of net investment income as
effectively connected with its conduct of that business. For the
reasons set forth below, we hold that article VII of the Canadian
Convention, 1986-2 C.B. at 260, overrides section 842(b).
FINDINGS OF FACT
Some of the facts have been stipulated and are found
accordingly. The stipulation of facts and accompanying exhibits
are incorporated herein by this reference. The facts found are
those which, unless otherwise specified, existed during the years
at issue.
A. Petitioner
The North West Life Assurance Co. of Canada (petitioner) is
a life insurance company organized under the corporation laws of
Canada with its principal place of business located in Vancouver,
British Columbia, Canada. Petitioner operates its life insurance
business solely in the United States and Canada and is in the
business of writing deferred annuities and life insurance
policies. Petitioner began operating in the United States (U.S.
branch) in 1971, selecting the State of Washington as its State
of entry and subjecting itself to the insurance laws of that
State and to regulation by that State's insurance commissioner.
Petitioner maintains a sales and underwriting office in Bellevue,
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