Taiyo Hawaii Company, Ltd. - Page 28

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               Petitioner's Untimely Treaty Discrimination Argument--                 
          Alternatively, if we find the excess interest provisions                    
          applicable, then petitioner argues that section 884(f)(1)(B)                
          violates article VII (Nondiscrimination) of the treaty.  The                
          antidiscrimination argument was raised for the first time in                
          petitioner's reply brief (the final brief in a seriatim briefing            
          pattern), following respondent's answering and petitioner's                 
          opening briefs.  Although petitioner fashions its argument as               
          though it were in response to respondent's arguments made on                
          brief, we find that this position or argument was, to the Court's           
          knowledge, not raised by petitioner prior to trial, and it was              
          not raised during trial or in petitioner's opening brief.  Thus,            
          respondent was not afforded an opportunity to address                       
          petitioner's position.  Petitioner points out that the                      
          Commissioner, in Notice 89-80, 1989-2 C.B. 394, articulated the             
          position that the excess interest tax provisions do not violate             
          nondiscrimination provisions of several income tax treaties,                
          including the one with Japan, to which the United States is a               
          party.  We find petitioner's attempt to raise this argument to be           

          Management, Branch Profits Tax A-33 (1994).                                 
               16  Petitioner made the generalized argument that, as a                
          Japanese corporation, it would be treated "less favorably"                  
          because it is "subject to more burdensome taxes" than a similarly           

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