Arthur Goldberg

“ In fact, the treaty creates some inequalities of treatment. For example, the very exemption provided by Article XIV, on which the petitioner relies, is limited in its application to United Kingdom residents who are not 'engaged in trade or business in the United States.' Thus, not even all United Kingdom residents are immune from capital gains taxation in this country, though United States residents doing business or conducting a trade in the United Kingdom would receive the full benefit of the absence of a general capital gains tax there. ”

“ Our interpretation affords every benefit negotiated for by the parties to the Convention on behalf of their respective residents and prevents an unintended tax windfall to a private party. The language and purposes of the treaty are amply served by adhering to its clear import limiting exemption to 'residents of the United Kingdom' falling within the exemptive purview. The petitioner, a resident American trust, is properly subject to United States income tax on its retained capital gains. ”