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Article 23 of the U.S.-U.K. Convention, 31 U.S.T. at 5685,
provides:
Article 23
Elimination of Double Taxation
(1) In accordance with the provisions and subject
to the limitations of the law of the United States (as
it may be amended from time to time without changing
the general principle hereof), * * * in the case of a
United States corporation owning at least 10 per cent
of the voting stock of a corporation which is a
resident of the United Kingdom from which it receives
dividends in any taxable year, the United States shall
allow credit for the appropriate amount of tax paid to
the United Kingdom by that corporation with respect to
the profits out of which such dividends are paid. Such
appropriate amount shall be based upon the amount of
tax paid to the United Kingdom, but the credit shall
not exceed the limitations (for the purpose of limiting
the credit to the United States tax on income from
sources outside of the United States) provided by
United States law for the taxable year. For the
purposes of applying the United States credit in
relation to tax paid to the United Kingdom:
* * * * * * *
(c) that amount of tax credit referred
to in paragraph (2)(a)(i) of Article 10
(Dividends) which is not paid to the United
States corporation but to which an individual
resident in the United Kingdom would have
been entitled had he received the dividend
shall be treated as an income tax imposed on
the United Kingdom corporation paying the
dividend.
Petitioners argue that the last sentence of Article 23(1)(c)
specifically designates the unrefunded portion of the ACT as an
income tax imposed on the corporation paying the dividend.
Respondent, on the other hand, argues that such language was
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