The North West Life Assurance Company of Canada - Page 56

                                               - 56 -                                                  

            as it is in this particular context, the party proffering a                                
            contrary interpretation must persuade the court that its                                   
            construction comports with the view of both parties.  See                                  
            Sumitomo Shoji Am., Inc. v. Avagliano, 457 U.S. at 180.                                    
                  In light of the foregoing, the language and purpose of                               
            Article VII, paragraph (2) and the content of the Canadian                                 
            Convention as a whole, we also do not believe that the approach                            
            suggested by respondent could have been within the "shared                                 
            expectations of the contracting parties," Maximov v. United                                
            States, 299 F.2d at 568, and, consequently, we do not agree that                           
            petitioner implicitly accepted respondent's approach to                                    
            interpreting Article VII.                                                                  
                  Respondent is generally correct that section 842(b) was                              
            intended to serve as a backstop to the rules in section 842(a)                             
            and section 864(c).  The conference report to section 842(b)                               
            states:                                                                                    
                        The conferees understand that the provision                                    
                  governing foreign insurance companies solves a                                       
                  statutory problem in the context of the broader issue:                               
                  measuring the U.S. taxable income of a foreign                                       
                  corporation that is effectively connected with its U.S.                              
                  trade or business.  That issue more generally involves                               
                  the determination of which of the corporation's assets                               
                  generate gross effectively connected income, and which                               
                  of its expenses and liabilities are connected with such                              
                  income.  Certain types of assets and liabilities that                                
                  must, in this process, be attributed in whole or in                                  
                  part to a U.S. trade or business may be particularly                                 
                  suitable for movement among various trades or                                        
                  businesses of a single foreign corporation, may be                                   
                  fungible with assets and liabilities identified with                                 
                  other trades or businesses of the corporation, or may                                




Page:  Previous  46  47  48  49  50  51  52  53  54  55  56  57  58  59  60  61  62  63  64  65  Next

Last modified: May 25, 2011