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mortgage holdings. Petitioner has established that, in fact, it
avoided currency risk and only invested assets in the same
currencies as its insurance liabilities because of the narrow
profit margins on its products.
As petitioner correctly points out, if petitioner's accounts
were considered so inherently unreliable as to justify ignoring
those accounts for purposes of the Canadian Convention, such a
method should be used in all years, not just when the statute
produces a higher amount than does petitioner's accounts.
Article VII, paragraph (5) of the Canadian Convention makes clear
that the same method of profit allocation is to be used each year
unless there is a "good and sufficient reason to the contrary."
Paragraph 30 of the Model Commentaries to Article 7, paragraph
(6)17 explains that "a method of allocation once used should not
be changed merely because in a particular year some other method
produces more favourable results". The parties stipulated that
for 1989 petitioner's actual ECNII and minimum ECNII were
$19,910,031 and $19,606,065, respectively. As a result, section
842(b) would not increase petitioner's net investment income for
1989 because petitioner's actual ECNII exceeded petitioner's
17Art. 7(6) of the Model Treaty is substantially similar to
Art. VII(5) of the Canadian Convention. Art. 7(6) provides in
pertinent part: "For the purposes of the preceding paragraphs,
the profits to be attributed to the permanent establishment shall
be determined by the same method year by year unless there is
good and sufficient reason to the contrary."
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