- 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
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