Tom and Louise Kappus - Page 5




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          Pekar v. Commissioner, 113 T.C. 158, 161 (1999), and in Brooke              
          v. Commissioner, T.C. Memo. 2000-194, affd. per curiam 13 Fed.              
          Appx. 7 (D.C. Cir. 2001), which held that section 59(a)(2) and              
          the double taxation provision of the Convention Between the                 
          Federal Republic of Germany and the United States of America for            
          the Avoidance of Double Taxation and the Prevention of Fiscal               
          Evasion With Respect to Taxes on Income and Capital and to                  
          Certain Other Taxes (hereinafter U.S.-Germany treaty), August 29,           
          1989, U.S.-Germany, art. 23, 30 I.L.M. 1778, 1779, were in                  
          harmony.  Respondent further contends that if the Court were to             
          find that section 59(a)(2) and the treaty are in conflict, then             
          section 59(a)(2) is the last expression of the sovereign will of            
          the United States and must be applied to petitioners, in any                
          event.                                                                      
          B.   Applicable Statutes and U.S.-Canada Treaty Provisions                  
               The U.S.-Canada treaty, signed on September 26, 1980, and              
          amending protocols, signed on June 14, 1983 (First Protocol)4               
          and March 28, 1984 (Second Protocol)5, respectively, were entered           


               4    Protocol Amending the Convention Between the United               
          States of America and Canada With Respect to Taxes on Income and            
          on Capital, Sept. 26, 1980, S. Treaty Doc. 98-7 (1983)                      
          (hereinafter First Protocol).                                               
               5    Protocol Amending the Convention Between the United               
          States of America and Canada With Respect to Taxes on Income and            
          on Capital, Sept. 26, 1980, as amended by the Protocol on June              
          14, 1983, S. Treaty Doc. 98-22 (1984) (hereinafter Second                   
                                                             (continued...)           





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