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133 U.S. 258, 271 (1890). When a treaty and a statute relate to
the same subject, courts attempt to construe them so as to give
effect to both, see Whitney v. Robertson, 124 U.S. 190, 194
(1888), because “the intention to abrogate or modify a treaty is
not to be lightly imputed to the Congress”, Menominee Tribe v.
United States, 391 U.S. 404, 413 (1968) (quoting Pigeon River Co.
v. Cox Co., 291 U.S. 138, 160 (1934)); see also Estate of
Burghardt v. Commissioner, 80 T.C. 705, 713 (1983), affd. without
published opinion 734 F.2d 3 (3d Cir. 1984).
Petitioner argues that the characterization of royalty
income under section 904 must be identical for royalties received
by a U.S. subsidiary from a foreign parent corporation and
royalties received by a domestic corporation from a controlled
foreign corporation. Petitioner argues that to not characterize
its royalty income from L’Air as section 904(d)(1)(I) general
limitation income would violate Article 24(3) of the U.S.-France
Treaty. Petitioner cites the deficiency itself as evidence of
the detriment it suffers because respondent treats the royalty
income as passive income rather than general limitation income.
We disagree with petitioner’s analysis. Petitioner’s analysis
ignores the differences in the tax treatment, imposed by subpart
F, sections 951 to 964, of the Code, and consequently the
circumstances of the respective taxpayers mentioned.
Article 24(3), which corresponds to Article 24(5) of the
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