Guardian Industries versus the United States. And I would ask Council when they come forward to the lectern to please enter an appearance and introduce yourself and your firm if there is a firm affiliation and who you represent. So that way the record is clear. So we'll proceed first with Ms. Oppenheimer. I'm Joan Oppenheimer from the Department of Justice and I represent the United States and this proceeding. Welcome. Thank you. On the basic principle of the foreign tax credit is to prevent double taxation. Would the new regulations resolve the issue in this case for future cases? It would resolve the future cases. It wouldn't resolve this case and there is that because the tax year is an issue per day the years that would be covered by their regulation. Plus it's not just this one case that issues that precedes the regulation. There is potentially an enormous amount of revenue issue that would create their regulation. The IRS reports that for 2000 which is the last year that they have figures. There was 53 billion and one tax credits that were claimed by consolidated foreign corporations
. We don't know how many were similarly situated to taxpayers in this case. But certainly it would open to anyone. The government loses this case to file an amended return and attempt to claim foreign tax credits even though the corresponding income has not been paid to the United States. How does the new regulation solve this? The new regulation basically solves this. I have a lot of stuff there by saying that by sending one we get the tax credit if you have the if you earn the income to which the tax credit is attributed. And it's our position that that is really not a change in the law. Well how does one's supposed to determine whether they earn the income of who earns the income? Does that matter for a law or a new law? Well that would be a matter of for a law. But I think that is not a difficult question in this. That is not really the question in this case. I don't think there's any issue about who really earned the income. A consolidated return was filed in this case and under under Luxembourg law even though consolidated return was filed each corporation each subsidiary still had to file a tax return on its own income. So the evidence would be clear as to who earned the income. So the consolidated tax return under Luxembourg law is simply an administrative consolidation that allows corporations to corporations that are part of a consolidated group to offset the income and losses of the weighted corporation. Indeed if under Luxembourg law the income of one subsidiary was attributed to his parent IRS would have allowed the deduction in this case
. But under Luxembourg law the income of the subsidiaries is not attributed to the parent. Each company is treated as earning its own income. There's no same merger for corporate law purposes. This is simply an amalgamation that for example if one company has a loss and another company has a profit it enables them to offset it. But there's also nothing in this record to suggest that Luxembourg law is treating the parent as a remittance age indeed. Well I think that the whole record would support the conclusion. What was earning testimony by any of the foreign law experts that under Luxembourg law the parents being treated as a remittance age? Well the testimony wasn't really testimony what there was was various decarations. Okay but the decarations don't, is I read the record and I'm happy to be corrected if I'm wrong about this that there isn't any evidence in these decarations that under Luxembourg law comparison treated as a remittance age. No but there is statements in the declaration in the declaration specifically in next declaration in which he stated that the income is not a triplet of that income. It's not attributed to the parent for example. But isn't that exactly what article 164 this and the grand dukal decree do that they attribute the income to the parent? No that is not what they do. They simply provide for say they don't attribute it in fact Carlo Mack who is the second highest ranking person in the Luxembourg tax authority and to also help draft both of the article 164 this and the base and the basic due to regulations interpreting that was asked specific questions about this. And the questions and answers are on page 10 of the opening brief. And question 1a does Luxembourg black tax law treat the parent corporation as earning income actually earned by the subsidiaries of the Consolidated Group? And then the next part of the question is if Luxembourg tax law treats the parent as earning the income actually earned by the subsidiaries does Luxembourg law
. Tax law disregard the separate corporate entities of the corporation of the subsidiaries. Next answer is the subsidiaries don't lose their juridical personality but article 164 this LAR income tax law only provides a consolidation of the results of the members. The next question alternatively are both the parent and the individual subsidiaries considered to earn the income actually earned by the subsidiaries answer. Only the individual subsidiaries are considered to earn the income actually earned by the subsidiaries. This would all matter quite a bit if we were deciding a case under the new regulation which clearly lays out the determination of what it means for someone to have paid. But the old regulation in particular F1 also clearly lays out what it means for someone to have paid. And it's the person on whom the foreign law imposes legal liability. Do you dispute in this case that there is no joint and several liability I was who was found below because it was my understanding that the government conceded that contention on appeal and is not appealing it. Well we don't appeal that contention but nevertheless we take the position at the regulation. The old regulation in the case is construing it directly support our position in this case. The old regulation says. We don't have any interpretation by the IRS to which we would owe deference Cleveland baseball deference. Let's say our decision in American Express we don't have any interpretation of the regulation that suggests that it means what you say it means. And as Judge Moore is pointing out the regulation on the face doesn't talk about income attribution it talks about legal liability
. So why should we sit here and say well this is all very interesting it says legal liability but we know they really meant income attribution. How are we supposed to know that? Well the courts have uniformly construed it that way. In fact the government has taken exactly the process. I don't see those cases as construing the regulation as requiring income attribution. They talk some of the cases talk about as a factual matter this income attribution but I don't see them saying that that's the meaning of the regulation. Well in Gleason works in Gleason works versus commissioner 58 tax court 464. The tax court said that the test under the regulation does not rest upon a search for the person from whom the tax is collectible but rather for the person upon whom the tax is imposed. Now the regulation certainly is a little bit ambiguous but when you take the wording into account we feel that it supports the government's position. Council I don't think it's ambiguous at all. The regulation says paid is whom foreign law imposes legal liability and the government doesn't dispute any longer that legal liability is only imposed on the parent. In this case you've given up your argument with regard to joint and several liabilities. No we haven't because it's our position that legal liability means legal liability for the tax itself and not legal liability for payment of the tax. That is exactly the distinction the regulation is making. The regulation says on the taxes considered paid by the person on whom foreign law imposes legal liability for the tax
. Even if another person such as a withholding agent remits the tax will it's our position that in this case the parent who paid the tax is in the position of a withholding agent and the subsidiaries will be. But you have no evidence that under Belgian law they're treated as a withholding agent or a remittance agent right? Well we do know that the legal liability for the tax under the court. What's the answer? The answer is no. There's nothing in this record that suggests that under Luxembourg law that they are a mere collection agent or a remittance agent. We submit that the facts of this case are exactly like the facts and glee centers. No but the answer to the question there is nothing there right? Well the record the record the depurations went towards establishing whether there was joint and several liability under my question. But you're not answering my question there's nothing there about their Luxembourg law treating them as a collection agent or a remittance agent right? Well there's nothing specifically that addresses that question no. But that is also the case in Glee's and Luxembourg it was the case in the Brazilian net long case and you have in each case the court held that the person that was entitled to the foreign tax credit was the person on whom the tax was imposed not the one who paid the tax. Even though in each case it was the foreign person who paid the tax and even though in each case if the foreign person did not pay the tax the tax could not be collected. In Glee's and Luxembourg's British law imposed legal liability for the tax on foreign borrow on the what would be in this case the foreign lending in the United States. But it prohibited assessment and collection from the lender only the British borrower was responsible to pay the tax and the court held that nevertheless the person entitled to the foreign tax credit was on the U.S. lender because that was the person whose income the tax was imposed. And I see I'm eating in too much of a bubble time it's our position this case is no different from police and works or the Brazilian net long cases
. And I'd like to reserve the rest of my time for the call. Okay Miss Alvin, thank you and we'll now hear from Mr. Weber. And again please enter your appearance for the record. Good afternoon your honours. Dwing Weber, Council for Guardian Industries. I'm with the law firm Baker and McKenzie also with me as George Clark. The court should affirm the conclusion in judgment of the court if I would claims based on what the U.S. tax law says and what it does not say and based on what the Luxembourg tax law says and does not say. Turning first to the U.S. income tax law, we see the section 901B1 provides a foreign tax credit to a taxpayer or U.S
. taxpayer that pays who accrues a foreign tax during the tax per year. In this case, GIE, the parent company of the Guardian Luxembourg Group paid that tax that properly accrued it and paid it. So the statutory for reference or status. The regulation. But the regulation seems to distinguish between somebody liable for the tax and somebody who's a remittance agent. And that's not a very clear distinction particularly in cases like this. How are we supposed to determine whether we're dealing with a remittance agent, our collection agent situation or not? Well, first of all, we'll go back to the original source for the regulation which was the middle case. And the middle of the concern was yes, the taxpayer paid the tax but we want to make sure that the tax is actually imposed on that tax pay or in other words it's the tax payers tax. Because that's the principle that's embodied in the F1 regulation section 9.1.901-2F1 which is the regulation that we're talking about. So when you're examining how whether or not it is the tax of the particular taxpayer in question, you have to look to the foreign law and see what foreign law says. In this case, the foreign law makes it very easy because it says point blank in the grand duple decree that liability is imposed on the parent for the consolidated income tax under Article 164. This is the Luxembourg tax law
. There's no question about this. But a foreign law could say that in a remittance agent situation. It could say the liability for the tax is imposed on the parent. Right? I mean, it's sort of mushy. It could be in the foreign law, you also have to separately or otherwise provide for liability in some fashion. But there is some further ambiguity built into this situation based on the fact that the subsidiaries were obligated to file their own returns. And that sort of suggests again that maybe the parent was acting more as a remittance agent and not paying tax on its own behalf or on behalf of the consolidated group. I'm glad you raised that, Your Honor, because I was listening to the dialogue before and I wanted a chance to address that. The grand duple decree and the circular published by the Luxembourg government both indicate that the reason that that tax return for each subsidiary supposed to be submitted as if the subsidiary was not part of a consolidated group. In other words, it's for information purposes. What the government actually does with that tax return then is use it in evaluating the consolidated income of the group. But interesting what happens on the backside after the income tax return is filed showing the taxable income of the separate subsidiary then an assessment is issued because there are a number of different Luxembourg taxes that are incorporated into each assessment. And in that assessment it sets out it shows a deduction or removal of the taxable income of the individual subsidiary so that the net taxable income on the assessment for each subsidiary is zero. And that's because that income has been moved over to the parent side
. It's assimilated, attributed, deemed to be the income of the parent however you want to say it. It's no longer the income of the subsidiary for purposes of determining liability to tax under the Luxembourg law. So that's the fact that they have to submit a return is relatively uninteresting. What's more important is what they do with the information. If we were to conclude that Luxembourg law doesn't attribute the income to the parent, do you lose? I know you're on it. In fact, our position is that that's wholly irrelevant to the decision because under the F1 regulation the touchstone is not whose income is it. But upon whom does form law impose liability for the tax? That's what the regulation says, that's what Bill said, that's what all of the cases including the withholding taxable. So suppose we concluded the regulations ambiguous. Do you win or does the government win? Well, it's hard to imagine how a regulation that says that you look at the regulations. I understand. But suppose we conclude that it isn't. I suppose if the court determines that it's ambiguous we would say no, you have to look to how the cases have construed the regulations since it was published. And the principle as it has been applied by the courts and indeed the IRS itself for many years. And the way the principle has always been applied
. But I understand all your arguments, the regulations, not ambiguous and that you win and all that. I'm saying let's just assume hypothetically we conclude that it is ambiguous. Do you win or does the government win? The taxpayer wins because the guidance from the courts and the administrative practice of the internal revenue service and its published revenue rules all apply the test by looking at foreign law. No, but you're here as you're not accepting my hypothetical. My hypothetical is we conclude that we can't determine that these sources don't allow us to determine the meaning of the regulation that it's inherently ambiguous. The sort of thing that would be resolved by some other interpretive principle. We can't figure it out from the language. The government wins under those circumstances, right? Because you're the one who's claiming the credit and you've got to establish your right to the credit. I'm sorry, Your Honor. I didn't interrupt. I thought you were saying that the assume that the regulation itself is ambiguous. I think what you're now asking is assume that Luxembourg law is ambiguous. No, I'm assuming that the regulations ambiguous but that the ambiguity can't be resolved by looking to other cases or the purposes of the regulation or whatever. You run into this sometimes in tax law. Somebody has the burden to establish the right to the deduction or the credit. So if we're in that kind of situation, the government would win, right? No, Your Honor. So what you're telling me is that the hypothetical is that the regulation is so ambiguous, we don't know what it means. And the case law and the rulings were going to ignore because we are. I guess we're going to fiat that. And so we have to come up with a new rule. Then I would still say, Your Honor, that the correct way to analyze this is to go back to the code which says that a taxpayer who pays a foreign tax is entitled to a tax credit. The regulation after all is an interpretation or a loss in the statute. It's not clear to me, Your Honor, what principle you would say that the taxpayer loses on in that situation. I also don't understand that to be the government's argument. The argument is that you should take the words of foreign liability or legal liability for the tax and the regulation. Take it out of the regulation. And in certain, instead, a test that would look at the person whose income is subject to tax. And there's nothing in the regulation that says anything about income
. Somebody has the burden to establish the right to the deduction or the credit. So if we're in that kind of situation, the government would win, right? No, Your Honor. So what you're telling me is that the hypothetical is that the regulation is so ambiguous, we don't know what it means. And the case law and the rulings were going to ignore because we are. I guess we're going to fiat that. And so we have to come up with a new rule. Then I would still say, Your Honor, that the correct way to analyze this is to go back to the code which says that a taxpayer who pays a foreign tax is entitled to a tax credit. The regulation after all is an interpretation or a loss in the statute. It's not clear to me, Your Honor, what principle you would say that the taxpayer loses on in that situation. I also don't understand that to be the government's argument. The argument is that you should take the words of foreign liability or legal liability for the tax and the regulation. Take it out of the regulation. And in certain, instead, a test that would look at the person whose income is subject to tax. And there's nothing in the regulation that says anything about income. And there's nothing in all of those authorities that say anything about income. So that certainly shouldn't be the test. If what you're asking your Honor is assume there's no test at all. So what I'm saying is assume the statute's ambiguous. Assume the regulations ambiguous. The taxpayer, there are many cases to this effect. The taxpayer has the obligation to prove it's entitled to a credit. And if there's, if so, the burden is on you. So the burden of ambiguity is on you. This is not an important point. But the fact is, it seems to me to under a law, if there were meaning ambiguity. The last interpreted principle that we would go to is that the taxpayer has the burden to establish the entitlement to the credit. And you would lose if we conclude same bigot. Your Honor, I'm having a very hard time responding because we can only rely on the law that's available to taxpayers when they file their tax
. And there's nothing in all of those authorities that say anything about income. So that certainly shouldn't be the test. If what you're asking your Honor is assume there's no test at all. So what I'm saying is assume the statute's ambiguous. Assume the regulations ambiguous. The taxpayer, there are many cases to this effect. The taxpayer has the obligation to prove it's entitled to a credit. And if there's, if so, the burden is on you. So the burden of ambiguity is on you. This is not an important point. But the fact is, it seems to me to under a law, if there were meaning ambiguity. The last interpreted principle that we would go to is that the taxpayer has the burden to establish the entitlement to the credit. And you would lose if we conclude same bigot. Your Honor, I'm having a very hard time responding because we can only rely on the law that's available to taxpayers when they file their tax. You don't like my hypothetical question. If you're asking me to concede that if you all ruled that way, that you can rule that way, I mean that's a threat for our government. That's not the question, but we've got to go on. Well, so we were talking about what the U.S. tax law says and what it doesn't say. And I think we pretty much dispense with what the tax law does say. What it doesn't say is I started to get to the F, the regular, the F1 regulation that we're focusing on, it makes no reference at all to income. So there's zero references. There's zero references in that regulation to any attribution or allocation concept or any variant of that term. And there are also zero references to any requirement for matching of the foreign tax credit with a particular income, which the tax relates. But the statute is specific with respect to legal liability. I'm sorry. This statute is specific with respect to legal liability
. You don't like my hypothetical question. If you're asking me to concede that if you all ruled that way, that you can rule that way, I mean that's a threat for our government. That's not the question, but we've got to go on. Well, so we were talking about what the U.S. tax law says and what it doesn't say. And I think we pretty much dispense with what the tax law does say. What it doesn't say is I started to get to the F, the regular, the F1 regulation that we're focusing on, it makes no reference at all to income. So there's zero references. There's zero references in that regulation to any attribution or allocation concept or any variant of that term. And there are also zero references to any requirement for matching of the foreign tax credit with a particular income, which the tax relates. But the statute is specific with respect to legal liability. I'm sorry. This statute is specific with respect to legal liability. That's the regulation. That's correct. I'm sorry, the regulation it hinges on the party that has legal liability. That's correct. As opposed to a party that is acting merely as a remittance agent. That is correct. So we're left with the dilemma of where we're and how to draw that line. Because here clearly is a GIE paid the tax. And the question is, how do we discern whether they paid the tax as a matter of legal liability under Luxembourg law? Or that they simply remitted the funds representing the tax obligations of the subsidiaries, each of which filed separate returns. And each of which were acknowledged by the government as having zero tax liability themselves. That still leaves us a little bit up in the year as to whether we're dealing with a remittance or whether we're dealing with a liability. And how do we draw that line? Well, as I said before, as a general matter, there always has to be liability under form. You don't have a tax if there isn't liability. So that liability has to be fixed somewhere
. That's the regulation. That's correct. I'm sorry, the regulation it hinges on the party that has legal liability. That's correct. As opposed to a party that is acting merely as a remittance agent. That is correct. So we're left with the dilemma of where we're and how to draw that line. Because here clearly is a GIE paid the tax. And the question is, how do we discern whether they paid the tax as a matter of legal liability under Luxembourg law? Or that they simply remitted the funds representing the tax obligations of the subsidiaries, each of which filed separate returns. And each of which were acknowledged by the government as having zero tax liability themselves. That still leaves us a little bit up in the year as to whether we're dealing with a remittance or whether we're dealing with a liability. And how do we draw that line? Well, as I said before, as a general matter, there always has to be liability under form. You don't have a tax if there isn't liability. So that liability has to be fixed somewhere. Now sometimes the law will provide for a special rule with respect to collection. You don't have that here in the Luxembourg case that the liability and the collection is with the same party under Luxembourg law. The parent company is not only liable for the tax, it's obliged to pay it. And you typically see that in situations where the person who's liable for the tax is present and subject to the jurisdiction of the foreign government. Where you run into a problem and where you see these special collection types of laws, typically is where a foreign government sits in the United States as well. As made determination, it's a heck of a lot easier to collect that tax from somebody else than the party upon whom the liability actually rests. And so in the case of the withholding tax cases, the foreign lender is a bank and a foreign jurisdiction over which the country imposing the tax doesn't have easy jurisdiction to collect the tax. I think what Judge Flynn is suggesting to you is that the great difficulty of drawing a line between liability as a collection agent, a liability collected and remitted. And the liability for the tax itself. You're out of from our perspective, that's a fabrication of the government's current argument in this case. In the vast majority of cases, there's no reason. What's the lubrication? It's a distinction that's made in the regulation. It is your honor and it is with a parenthetical with a reference tool with a holding agent. So it's very clear what the regulations had in mind
. Now sometimes the law will provide for a special rule with respect to collection. You don't have that here in the Luxembourg case that the liability and the collection is with the same party under Luxembourg law. The parent company is not only liable for the tax, it's obliged to pay it. And you typically see that in situations where the person who's liable for the tax is present and subject to the jurisdiction of the foreign government. Where you run into a problem and where you see these special collection types of laws, typically is where a foreign government sits in the United States as well. As made determination, it's a heck of a lot easier to collect that tax from somebody else than the party upon whom the liability actually rests. And so in the case of the withholding tax cases, the foreign lender is a bank and a foreign jurisdiction over which the country imposing the tax doesn't have easy jurisdiction to collect the tax. I think what Judge Flynn is suggesting to you is that the great difficulty of drawing a line between liability as a collection agent, a liability collected and remitted. And the liability for the tax itself. You're out of from our perspective, that's a fabrication of the government's current argument in this case. In the vast majority of cases, there's no reason. What's the lubrication? It's a distinction that's made in the regulation. It is your honor and it is with a parenthetical with a reference tool with a holding agent. So it's very clear what the regulations had in mind. The regulations weren't prepared in a vacuum. Treasury Department was familiar with the historical cases dealing with withholding tax situations and wanted to make clear that in that type of situation where you have a paying agent under foreign law, that that doesn't count. That's not the taxpayer that we're after. That's not the person who foreign law imposes liability. Isn't perhaps the answer to my dilemma of the fact that in this situation you have what the Grand Duke called agree and Article 164 v. that seems to suggest that it is the legal liability of the parent to remit the taxes on behalf of the group and you have in this record absolutely nothing to suggest that GIE is in any way acting merely as a remittance age. There certainly is nothing to suggest that your honor. I would say further that the tax that we're talking about here is... A time to tell things you should just say yes. Yes. Keep going. The tax is imposed under Article 164 v
. The regulations weren't prepared in a vacuum. Treasury Department was familiar with the historical cases dealing with withholding tax situations and wanted to make clear that in that type of situation where you have a paying agent under foreign law, that that doesn't count. That's not the taxpayer that we're after. That's not the person who foreign law imposes liability. Isn't perhaps the answer to my dilemma of the fact that in this situation you have what the Grand Duke called agree and Article 164 v. that seems to suggest that it is the legal liability of the parent to remit the taxes on behalf of the group and you have in this record absolutely nothing to suggest that GIE is in any way acting merely as a remittance age. There certainly is nothing to suggest that your honor. I would say further that the tax that we're talking about here is... A time to tell things you should just say yes. Yes. Keep going. The tax is imposed under Article 164 v. The liability for that tax is imposed on the parent company alone under Luxembourg law. In theory the Luxembourg government could have decided we're going to spread that liability around through joint and several liability. They didn't. They imposed it entirely on the parent company. There's no other mechanism by which liability might be imposed on the individual little subsidiaries that are members of the group. So you're out of a base on what the US tax law says. But the case is that somebody can be a remittance age and even though that's the only person obligated to make payment, right? That's entirely correct true. Because they could be the only ones obligated to pay and goes back to what I was describing before. As a practical matter, it's very hard to get a foreign bank to pay when it doesn't have any assets in the country. But it's very easy to get the borrower to pay. Particularly when I'm as under Brazilian law, you had to get approval of the banking authorities to make any payment at all. And before you get that approval, you had to show that the tax had been paid. That guarantees collection of the tax. And so in that sort of situation, absolutely, you're going to have a separate need to have a collection
. The liability for that tax is imposed on the parent company alone under Luxembourg law. In theory the Luxembourg government could have decided we're going to spread that liability around through joint and several liability. They didn't. They imposed it entirely on the parent company. There's no other mechanism by which liability might be imposed on the individual little subsidiaries that are members of the group. So you're out of a base on what the US tax law says. But the case is that somebody can be a remittance age and even though that's the only person obligated to make payment, right? That's entirely correct true. Because they could be the only ones obligated to pay and goes back to what I was describing before. As a practical matter, it's very hard to get a foreign bank to pay when it doesn't have any assets in the country. But it's very easy to get the borrower to pay. Particularly when I'm as under Brazilian law, you had to get approval of the banking authorities to make any payment at all. And before you get that approval, you had to show that the tax had been paid. That guarantees collection of the tax. And so in that sort of situation, absolutely, you're going to have a separate need to have a collection. But you don't have that in the case of the consolidated group under Luxembourg law. Same as under US tax law. So, if we use the court to affirm the judgment of the court federal courts. Just forever thank you very much. Ms. Oppenheimer, have you heard anything to give you pause? You don't have it in your honor. And there's nothing in the grand duquel to Cree that supports the Apple East position. The grand duquel decree simply says that the parent is liable for corporate income taxes corresponding to the taxable income of the group. But that principle is consistent with the government's position that the parent is simply the remitting agent. How would you help us decide where to draw this line between legal liability as a... The liable party or simply liability as a remitting agent? One thing that the courts have considered as the purpose of the statute and whether the tax payer's position is facilitating the purpose of the statute. For example, in a case, Marsman versus Commissioner, this is a fourth circuit case
. But you don't have that in the case of the consolidated group under Luxembourg law. Same as under US tax law. So, if we use the court to affirm the judgment of the court federal courts. Just forever thank you very much. Ms. Oppenheimer, have you heard anything to give you pause? You don't have it in your honor. And there's nothing in the grand duquel to Cree that supports the Apple East position. The grand duquel decree simply says that the parent is liable for corporate income taxes corresponding to the taxable income of the group. But that principle is consistent with the government's position that the parent is simply the remitting agent. How would you help us decide where to draw this line between legal liability as a... The liable party or simply liability as a remitting agent? One thing that the courts have considered as the purpose of the statute and whether the tax payer's position is facilitating the purpose of the statute. For example, in a case, Marsman versus Commissioner, this is a fourth circuit case. Under the statute, the tax payer was in fact entitled to the tax credit that it costs. The tax payer had owed Philippine taxes for 1938 to 40 and it actually paid these taxes to the Philippine government in 1941. It didn't become a resident of the United States until September of 1940. So under the statute, which entitles you, a credit for taxes payer, it was entitled to the credit. Nevertheless, the court disilleted the credit for the taxes that were owing for years that the tax payer was not a resident in this country because the court said the purpose of the court tax credit was to prevent double taxation and to allow the credit in this case where, in fact, there could be no double taxation because the tax payer wasn't even a resident in this country. So the United States was not taxing the same income as the Philippines. The court said that to allow the tax credit in those circumstances would divine lives to the purpose of the tax, even though the literal wording of the statute would support the credit. So I would submit that in doubtful cases such as this one of the things the court considered considered is the purpose of the statute. In this case, the income for which a credit has sought has never been taxed in this country. If tax payer gets the credit, it will use the credit to offset US income. That was not the purpose of the tax credit. The purpose was to prevent double taxation, not to allow tax payer use the credit to offset income earned in this country. Thank you very much. I thank both counsels
. The case is submitted