Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-08-01253/USCOURTS-caDC-08-01253-0/pdf.json

Parties Involved:
Commissioner of Internal Revenue Service
Appellee
Judith A. Jamieson
Appellant
William David Jamieson
Appellant

Document Text:

United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Decided October 16, 2009 

No. 08-1253 

WILLIAM DAVID JAMIESON AND JUDITH A. JAMIESON, 

APPELLANTS

v. 

COMMISSIONER OF INTERNAL REVENUE SERVICE, 

APPELLEE

Appeal from the United States Tax Court 

William David Jamieson and Judith A. Jamieson, pro se, 

were on the briefs for appellants. 

Robert W. Metzler and Melissa Briggs, Attorneys, U.S. 

Department of Justice, were on the brief for appellee. John A. 

Nolet, Attorney, entered an appearance. 

Before: ROGERS and KAVANAUGH, Circuit Judges, and 

WILLIAMS, Senior Circuit Judge. 

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS. 

WILLIAMS, Senior Circuit Judge: William David and 

Judith A. Jamieson are United States citizens who lived in 

Canada in 2003, earned Canadian income and paid Canadian 

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taxes on that income. On their U.S. income tax return for that 

year, they claimed foreign tax credits of $95,132 against their 

reported U.S. tax liability of $96,429, resulting in a net U.S. 

liability of $1297. They did not compute any alternative 

minimum tax (“AMT”) liability under 26 U.S.C. § 55, noting 

on their return their position that a tax treaty between the 

United States and Canada precluded any such liability. The 

Commissioner of Internal Revenue rejected this position and, 

applying 26 U.S.C. § 59(a)(2)’s limit on foreign tax credits for 

AMT purposes, calculated that the Jamiesons owed $6078 in 

alternative minimum tax. The Tax Court, finding our decision 

in Kappus v. Commissioner, 337 F.3d 1053 (D.C. Cir. 2003), 

to be materially indistinguishable from this case, sustained the 

Commissioner’s determination. See Jamieson v. 

Commissioner, 95 T.C.M. (CCH) 1430 (T.C. 2008). We 

affirm. 

The Convention with Respect to Taxes on Income and on 

Capital, U.S.-Can., Sept. 26, 1980, T.I.A.S. No. 11,087, 

provides as follows: 

[D]ouble taxation shall be avoided as follows: 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 citizen 

or resident of the United States . . . as a credit against the 

United States tax on income the appropriate amount of 

income tax paid or accrued to Canada. 

Id. art. XXIV, para. 1. 

A later act, the Tax Reform Act of 1986, limited the 

foreign tax credit for AMT purposes to 90% of the taxpayer’s 

AMT liability. See Pub. L. No. 99-514, § 701(a), 100 Stat. 

2320, 2337 (codified as amended at 26 U.S.C. § 59(a)(2)), 

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repealed in relevant part by American Jobs Creation Act of 

2004, Pub. L. 108-357, § 421, 118 Stat. 1418, 1514. The 

Senate Finance Committee explained the new limitation as 

follows: “[T]he committee believes that taxpayers should not 

be permitted to use the credit to avoid all minimum tax 

liability . . . . [I]t is fair to require at least a nominal tax 

contribution from all U.S. taxpayers with substantial 

economic incomes.” S. Rep. No. 99-313, at 520 (1986), 

quoted in Jamieson, 95 T.C.M. (CCH) at 1432. 

In Kappus, two U.S. citizens living in Canada challenged 

26 U.S.C. § 59(a)(2)’s limitation on foreign tax credits for 

AMT purposes, arguing that it “was in direct conflict with the 

U.S.-Canada Tax Treaty.” 337 F.3d at 1054. In that case the 

IRS had proposed a reconciliation of the statute and treaty, a 

reconciliation that would have sustained the IRS’s tax 

assessment. We assumed in favor of the taxpayer that the 

IRS’s proposed reconciliation was incorrect, and then held 

that the limitation in § 59(a)(2) was controlling over the treaty 

because it was “last-in-time.” We rejected the taxpayers’ 

contention that protocols amending the treaty in 1995 and 

1997 (thus post-dating enactment of § 59(a)(2)), which related 

entirely to issues other than those covered by § 59(a)(2), made 

the treaty last-in-time. See 337 F.3d at 1058-60. 

The Jamiesons propose to distinguish Kappus by 

asserting a reconciliation in favor of the taxpayers, which 

Kappus, deciding for the government, could not have assumed 

away. Specifically, they argue that we could reconcile the 

treaty and the statute by allowing the taxpayers to claim 

foreign tax credits after their entire U.S. tax liability 

(including AMT) has been calculated. In their view, 

taxpayers first calculate their tax liability in accordance with 

the provisions of the Internal Revenue Code, including the 

90% limitation on foreign tax credits for AMT purposes. If 

the tax liability thus calculated results in any double taxation, 

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then the treaty tax credits may be applied to reduce U.S. tax 

liability. Appellants’ Br. at 27-28. Under this reading 

§ 59(a)(2) normally would affect the total tax liability only of 

taxpayers who worked in a foreign country that, unlike 

Canada, did not have a treaty with the United States limiting 

“double taxation.” 

We find this interpretation implausible. Section 59(a)(2) 

does not on its face suggest that it was intended to have such a 

narrow impact. Nor do the Jamiesons cite any persuasive 

authority for the proposition that a revenue statute saying that 

a given credit “shall not exceed” a certain limit may be 

construed only to limit the amount that a taxpayer calculates 

provisionally, allowing the taxpayer to ignore the limit when 

later calculating his or her legally binding tax due. Cf.

Telecom*USA, Inc. v. United States, 192 F.3d 1068, 1072 

(D.C. Cir. 1999) (“[A] taxpayer who seeks a deduction bears 

the burden of demonstrating a clear entitlement.”). 

Moreover, to the extent that there might be any ambiguity 

about whether Congress intended § 59(a)(2) to apply to 

taxpayers in countries with which the United States has 

“double taxation” treaties, Congress resolved that ambiguity 

with the Technical and Miscellaneous Revenue Act of 1988 

(“TAMRA”), Pub. L. No. 100-647, 102 Stat. 3342. There it 

provided that certain amendments made by the Tax Reform 

Act of 1986, including those made by its title VII (of which 

§ 59(a)(2) was a part), “shall apply notwithstanding any treaty 

obligation of the United States in effect on the date of the 

enactment of the [1986 Tax] Reform Act.” Id. § 1012(aa)(2) 

(codified at 26 U.S.C. § 861 note) (emphasis added). We 

found in Kappus that “TAMRA thus made it crystal clear that 

Congress intended the 90% cap on the AMT foreign tax credit 

to supercede any preexisting treaty obligation with which it 

conflicted.” 337 F.3d at 1058. That finding completely 

precludes the Jamiesons’ suggestion that the statutes and 

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treaty can be reconciled with an interpretation favorable to 

their position. 

The judgment of the tax court is therefore 

Affirmed. 

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