Tom and Louise Kappus - Page 10




                                       - 10 -                                         

                    (2) Certain Amendments To Apply Notwithstanding                   
               Treaties.-–The following amendments made by the Reform                 
               Act [viz Tax Reform Act of 1986] shall apply notwith-                  
               standing any treaty obligation of the United States in                 
               effect on the date of the enactment of the Reform Act:                 
                         (A) The amendments made by section 1201 of                   
                    the Reform Act.                                                   
                         (B) The amendments made by title VII of the                  
                    Reform Act to the extent such amendments relate to                
                    the alternative minimum tax foreign tax credit.                   
          Thus, Congress specifically codified the later-in-time rule with            
          respect to section 59(a)(2).  Id. at 319.                                   
               The Third Protocol, signed on March 17, 1995, and entered              
          into force on November 9, 1995, made changes to article XXIV                
          affecting credits for Social Security tax, corporate tax                    
          exemptions, and the tax treatment of dividends, interest, and               
          royalties.  Third Protocol, Art. 12.  These amendments did not              
          alter the general rule of article XXIV found in paragraph 1, as             
          stated above.  Id.; U.S.-Canada treaty, art. XXIV, par. 1.                  
          Significantly, the Third Protocol amended paragraph 2 of Article            
          II of the treaty, setting forth the taxes covered by the treaty.            
          That paragraph was amended to read as follows:                              
               2.  Notwithstanding paragraph 1, the taxes existing on                 
               March 17, 1995 to which the Convention shall apply are:                
                             *   *   *   *   *   *   *                               
                    (b) In the case of the United States, the Federal                 
                    income taxes imposed by the Internal Revenue Code                 
                    of 1986.                                                          







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