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percent limitation on the availability of their AMT foreign tax
credit would constitute a violation of the above treaty.
The tax treaty between the United States and the Czech
Republic, 1993 Income and Capital Tax Convention, Sept. 16, 1993,
U.S.-Czech Republic, Tax Treaties (CCH) par. 2403, addresses the
manner in which citizens of the United States may avoid the
imposition of double taxation with respect to income taxable by
both Countries. The treaty states in relevant part:
Article 24--Relief From Double Taxation
1. In accordance with the provisions and subject to
the limitations of the law of the United States (as it may
be amended from time to time without changing the general
principle hereof), the United States shall allow to a
resident or citizen of the United States as a credit against
the United States tax on income the income tax paid to the
Czech Republic by or on behalf of such resident or citizen.
[Emphasis added.]
Respondent concedes that application of the above section
59(a)(2)(A) 90-percent limitation on petitioners’ AMT foreign tax
credit will result in “some double taxation.” Respondent
contends, however, that the 90-percent limitation on the AMT
foreign tax credit is proper and does not violate Article 24(1)
of the U.S.-Czech treaty.
The AMT under section 55 applies generally to all taxpayers,
and in this case, as a result of the 90-percent limitation on the
AMT foreign tax credit under section 59(a)(2)(A), the calculation
of petitioners’ TMT exceeds petitioners’ regular tax by $2,136,
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