American Air Liquide, Inc. and Subsidiaries - Page 12

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          current OECD model convention, is a means “to ensure equal                  
          treatment for taxpayers residing in the same State.”  I Model Tax           
          Convention On Income and On Capital, Article 24, par. 5, 57 (OECD           
          Nov. 1977).  Petitioner is a domestic corporation, and the tax              
          treatment of its foreign source royalty income is determined in             
          exactly the same manner as for any other domestic corporation               
          receiving royalty income from a noncontrolled foreign                       
          corporation.  Petitioner has received equal treatment with all              
          other similarly situated taxpayers residing in the United States.           
          The fact that petitioner’s ultimate parent is a French                      
          corporation plays no part in determining the characterization of            
          petitioner’s royalty income.  Consequently, we do not find any              
          basis for petitioner’s assertion that respondent’s alleged                  
          failure to characterize petitioner’s royalty income as section              
          904(d)(1)(I) general limitation income contravenes Article 24(3)            
          of the U.S.-France Treaty.                                                  
               2.  The “Reserved” Paragraph and Treasury Representations              
               For convenience, we will examine petitioner’s second and               
          third arguments together.  Petitioner’s reliance on the                     
          “reserved” paragraph in section 1.904-5(i)(3), Income Tax Regs.,            
          is also misplaced.  In Connecticut Gen. Life Ins. Co. v.                    
          Commissioner, 109 T.C. 100, 110 (1997), affd. 177 F.3d 136 (3d              
          Cir. 1999), we held in similar circumstances that a reserved                
          paragraph in a regulation “simply reserves a space for                      

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