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Thus, for purposes of the instant case, Article 24(3) provides
that a U.S. corporation owned by French residents (French-owned
corporation) shall not be subjected to U.S. taxation that is
“other or more burdensome” than the taxation to which a U.S.
corporation owned by U.S. residents (U.S.-owned corporation),
“carrying on the same activities” as the French-owned
corporation, is subjected. Petitioner argues that petitioner, a
French-owned corporation, is subjected to other or more
burdensome taxation than a U.S.-owned corporation would be. We
disagree.
Article 24(3) prevents “other or more burdensome” treatment
based on the residence of the owners of the capital of the
corporation. Article 24(3) does not apply when there is no
connection between the residence of the owners and the different
tax treatment that results under U.S. law. See generally Vogel,
Klaus Vogel on Double Taxation Conventions, Art. 24(5) par. 165
(3d ed. 1997) (“The provision does not protect enterprises in
which non-residents participate, against discrimination
generally, when there is no connection between the discrimination
and the ownership of capital by foreigners.”). Petitioner does
not seem to dispute this. Rather, petitioner argues that
different treatment in the instant case is connected to the
residence of the owners; i.e., that petitioner is denied an
accrual basis deduction for interest amounts owed to its foreign
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