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reported zero tax liability on her separate Canadian income
tax return.
Petitioners timely filed a joint U.S. income tax
return for 1998 (U.S. return). On their U.S. return,
petitioners reported taxable income of $2,099,121 and
precredit U.S. tax of $602,237. Petitioners claimed a
foreign tax credit of $750,387, based upon the taxes paid
by Mr. Price to Canada, and they reported total U.S. tax
after this credit of zero. Petitioners also reported
alternative minimum tax of zero.
Petitioners attached to their U.S. return a Form 6251,
Alternative Minimum Tax--Individuals. On their Form 6251,
petitioners reported precredit tentative alternative
minimum tax pursuant to section 55(b)(1)(A) of $501,999,
an alternative minimum tax foreign tax credit of $451,799,
and alternative minimum tax of $50,200. At the top of Form
6251 appear the handwritten words "Treaty Override see
[Form] 8833".
Petitioners also attached to their U.S. return two
Forms 8833, Treaty-Based Return Position Disclosure
Under Section 6114 or 7701(b). On one of the Forms 8833,
petitioners asserted that section 59 is overruled or
modified by article XXIV of the U.S.-Canada treaty. They
set forth the following explanation of their position:
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