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The Taxpayer is taking the position that
paragraph 1 of Article XXIV was enacted to
eliminate double taxation of citizens of the
U.S. and that Paragraphs 1, 4, 5 and 6 of Article
XXIV override U.S. Domestic tax law. Therefore
the foreign tax credit to be allowed by the U.S.
under the Canada-U.S. Tax Convention should not
be affected by the 90% limitation in the U.S. AMT
Rules.
Respondent concedes that this Form 8833 disclosed
petitioners' position, that a treaty of the United States
overrules or modifies an internal revenue law, as required
by section 6114.
Respondent mailed a notice of deficiency to
petitioners with respect to their U.S. return. In that
notice, respondent determined that petitioners' alternative
minimum tax for 1998 is $50,200. Respondent determined
that petitioners' precredit alternative minimum tax was
$501,999, and that their alternative minimum tax foreign
tax credit was limited to $451,799, or 90 percent, of that
precredit amount. In effect, respondent determined that
petitioners' alternative minimum tax foreign tax credit
for 1998 is subject to limitation under section 59(a)(2),
contrary to the position set forth by petitioners on their
Form 8833.
This case requires us to examine section 59(a)(2) and
the provisions of the U.S.-Canada treaty dealing with the
elimination of double taxation. We must determine whether
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