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fungibility principles in these ways is not
inconsistent with the arm's-length standard and does
not violate U.S. income tax treaties. Similarly, the
agreement's provision, which takes into account both
the taxpayer's actual investment yield and arm's-length
measures of yield and U.S.-connected assets, is
appropriate under income tax treaties. [H. Conf. Rept.
100-495, at 983-984 (1987), 1987-3 C.B. 193, 263-264;
emphasis added.]
The majority correctly states that we must consider the
expectation and intentions of the signatories to a Treaty. I
believe that the plain language of the Treaty and Commentaries
supports respondent's position that section 842(b) is consistent
with the Treaty. Clearly, the Treasury Department's
preratification explanation of the Treaty, the statutory
provisions in place when the Treaty was signed and ratified, the
consistent interpretation of the Treaty provisions by the United
States Government, and the express view of Congress shortly after
ratification that section 842(b) was consistent with the Treaty,
all support the conclusion that the United States intended and
believed that the Treaty and section 842(b) were consistent. The
majority cites to no contrary statements of intent made by the
Canadian Government during the 15 years between signing the
Treaty and this litigation. Applying settled principles of
interpretation to the situation before us, it is clear that the
language of the Treaty contemplates the attribution of profits
beyond the actual profits that were earned or reported. Section
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