American Air Liquide, Inc. and Subsidiaries - Page 10

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               look-through treatment to payments from foreign non-                   
               controlled payors.  See TD 8412 (1992-1 C.B. 271, 273).                
               Treasury and the IRS continue to believe that the nature of            
               the income earned by a foreign non-controlled payor from the           
               use of the licensed property should not determine whether a            
               rent or royalty payment constitutes income from the active             
               conduct of a trade or business of the recipient. [Id.]                 
          The supplementary information accompanying the proposed                     
          regulation strongly supports respondent’s position in the instant           
          case.  Further, we find no support for petitioner’s arguments               
          contained in the proposed regulations.                                      
          C.   Analysis                                                               
               1.   Interaction of Code and U.S.-France Treaty Provision              
               Under the U.S. Constitution, treaties are given equal status           
          with laws passed by Congress.  See U.S. Const., art. VI, sec. 1,            
          cl. 2.  A treaty is to be liberally construed to give effect to             
          the purpose which animates it.  See United States v. Stuart, 489            
          U.S. 353, 368 (1989); Bacardi Corp. of Am. v. Domenech, 311 U.S.            
          150, 163 (1940).  When a provision of a treaty fairly admits of             
          two constructions, one restricting, the other enlarging, rights             
          which may be claimed under it, the more liberal interpretation is           
          to be preferred.  See United States v. Stuart, supra at 368;                
          Bacardi Corp. of Am. v. Domenech, supra; Samann v. Commissioner,            
          36 T.C. 1011, 1014-1015 (1961), affd. 313 F.2d 461 (4th Cir.                
          1963).  In construing a treaty, the Court gives the language its            
          ordinary meaning in the context of the treaty, unless a more                
          restricted sense is clearly intended.  See De Geofroy v. Riggs,             

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