                       T.C. Memo. 1998-418



                     UNITED STATES TAX COURT



             STEPHEN D. PODD, ET AL., Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent*



     Docket Nos. 20225-93, 20226-93,   Filed November 18, 1998.
                 20227-93, 20228-93,
                 20229-93, 6209-94,
                  6210-94, 6211-94,
                  6212-94, 6213-94,
                  6214-94.1


     Kevin M. Flynn and Julian W. Dority, for petitioners.

     John Aletta, Elise Frost Alair, and Bradford A. Johnson, for

respondent.

*
     This Supplemental Memorandum Opinion supplements our prior
Memorandum Opinion in the instant case, Podd v. Commissioner,
T.C. Memo. 1998-231, filed June 30, 1998.
1
     The following cases are consolidated herewith: Victor I.
Podd, docket No. 20226-93; Victor T. Podd, docket No. 20227-93;
Powertex, Inc., docket No. 20228-93; Powertex, Inc., docket No.
20229-93; Powertex, Inc., docket No. 6209-94; Victor T. Podd,
docket No. 6210-94; Victor I. Podd, docket No. 6211-94; Stephen
D. Podd, docket No. 6212-94; Julia Podd, docket No. 6213-94; and
Powertex, Inc., docket No. 6214-94.
                                - 2 -


                   SUPPLEMENTAL MEMORANDUM OPINION

     WELLS, Judge:    This matter is before the Court on

petitioners' motion pursuant to Rule 161 for reconsideration of

our prior Memorandum Opinion, T.C. Memo. 1998-231 (prior

opinion).   Unless otherwise indicated all section references are

to the Internal Revenue Code in effect for the years in issue,

and all Rule references are to the Tax Court Rules of Practice

and Procedure.    Petitioners ask that we reconsider our prior

opinion that held, inter alia, that petitioner Victor I. Podd,

Jr. (hereinafter petitioner), was not a Canadian resident during

1990 and that he was a U.S. resident during that year.

     We incorporate into this Supplemental Memorandum Opinion by

reference the findings of fact in our prior opinion.

Additionally, we restate below certain of those findings that are

relevant to the issues presented by the instant motion.    We also

set forth below certain supplementary findings of fact that were

not set forth in our prior opinion but which are based on the

record of the trial of the instant case and relevant to our

analysis below.

     Petitioner was born and raised in Canada and is a Canadian

citizen.    Since 1970, petitioner's family has maintained a home

in Montreal, Province of Quebec, Canada (family home).     On July

6, 1987, petitioner applied for U.S. resident alien immigration

status.    The Immigration and Naturalization Service (INS) granted
                                 - 3 -


resident alien status to petitioner on July 7, 1987, which

petitioner held through December 31, 1990.

     During 1990, petitioner owned 24 percent of the outstanding

shares of the following corporations:    Powertex, Inc. (Powertex),

a Vermont corporation, Powertex Plus, Inc. (Powertex Plus), a

Montreal corporation, and Powertex, Inc. (Powertex, S.C.), a

South Carolina corporation.    During 1990, petitioner was vice

president of Powertex, Powertex Plus, and Powertex, S.C.    As vice

president of Powertex, petitioner purchased raw materials and

hired employees for the Powertex plant in Alburg, Vermont, and

dealt with Powertex customers.    As vice president of Powertex

Plus, petitioner oversaw the daily operation of Powertex Plus'

factory in Rouses Point, New York, and communicated with Powertex

Plus' suppliers in Montreal.    As vice president of Powertex,

S.C., petitioner supervised the startup of the company's

operations in Charleston, South Carolina.

     During 1990, petitioner also owned a 25-percent share in the

Podd Trust Associates partnership and the Fort Montgomery Estates

partnership.   Both partnerships own and lease property in the

United States.

     On January 1, 1989, petitioner met Ann Cohen (Ms. Cohen), a

resident of Fort Lauderdale, Florida.    Shortly afterwards,

petitioner and Ms. Cohen began dating.    Petitioner and Ms. Cohen

continued dating throughout 1989 and 1990.
                                 - 4 -


     During 1989, Ms. Cohen frequently traveled to Montreal to

visit petitioner.   During 1990, Ms. Cohen's ex-husband, Bruce

Cohen, sued her for sole custody of their child, Gabrielle,

alleging that Ms. Cohen's frequent trips out of the United States

resulted in her abandonment of Gabrielle.    The case was later

resolved, and Ms. Cohen retained joint custody of Gabrielle.

Afterwards, Ms. Cohen traveled to Montreal less frequently, and

petitioner increased the number of trips he made to Fort

Lauderdale, Florida.

     During 1990, petitioner spent 160 days in Florida, 50 days

in South Carolina, and 35 days traveling through other parts of

the United States attending trade shows and spent 120 days in

Montreal.

     On March 26, 1990, Powertex purchased mobile telephone

service for petitioner's use at Ms. Cohen's apartment.

Petitioner used a desk and a fax machine at Ms. Cohen's apartment

to conduct business while he was in Florida.    During May of 1990,

petitioner transported a boat owned by him and his brother,

Stephen D. Podd, to Florida and docked it at the marina servicing

Ms. Cohen's apartment.   At that time, petitioner obtained an

insurance policy covering the boat and listed Ms. Cohen's

apartment as his address.   While he was in Florida, petitioner

drove a car owned by Powertex.    On August 22, 1990, petitioner

obtained a Florida driver's license which identified his address

as that of Ms. Cohen's apartment.
                                - 5 -


     During 1990, petitioner shared an office at the family home

with his brother Stephen D. Podd.    Petitioner was allotted his

own bedroom at the family home in which he kept many personal

belongings, including his stereo and hockey equipment.

Petitioner also kept two automobiles, both registered in

Montreal, in the garage of the family home.    During 1990,

petitioner retained his Montreal driver's license and Canadian

health insurance.    Petitioner saw a Canadian doctor and a

Canadian dentist.    Petitioner also maintained bank accounts at

four Montreal banks and membership at a Canadian health club.

For the 1990 taxable year, petitioner filed a Canadian resident

income tax return.

     On January 1, 1991, petitioner and Ms. Cohen became engaged

and, on August 16, 1991, they married.    During 1991, petitioner

moved his personal belongings, including one of his automobiles,

from Canada to Florida.    Afterwards, petitioner began seeing a

doctor and a dentist in Florida and joined a health club.     For

the 1991 taxable year, petitioner claimed that he was a U.S.

resident for income tax purposes and resided in Fort Lauderdale,

Florida.

     We must decide whether to reconsider our prior opinion that

held petitioner was a U.S. resident during 1990 and that he was

not a Canadian resident during that year.    Rule 161 provides that

a motion for reconsideration must be filed within 30 days after a

written opinion has been served unless the Court otherwise
                               - 6 -


permits.   The granting of a motion for reconsideration rests

within the discretion of the Court.    Vaughn v. Commissioner, 87

T.C. 164, 166 (1986).   The Court generally denies such a motion

unless unusual circumstances or substantial error is shown.     Haft

Trust v. Commissioner, 62 T.C. 145, 147 (1974), affd. on this

issue 510 F.2d 43, 45 n.1 (1st Cir. 1975).

     In their motion, petitioners contend that this Court should

have applied the income tax treaty in effect between the United

States and Canada and should have found that, during 1990,

petitioner was a Canadian resident for income tax purposes.

     The treaty in effect between the United States and Canada

governs a taxpayer's residency only if the taxpayer shows that he

is a resident of both the United States and Canada.   Convention

with Respect to Taxes on Income and on Capital, Sept. 26, 1980,

U.S.-Can., art. IV, par. 2, T.I.A.S. No. 11087, 1986-2 C.B. 258,

259, as amended by protocol, June 14, 1983, 1986-2 C.B. 270, and

by second protocol, Mar. 28, 1984, 1986-2 C.B. 274 (hereinafter

Canada Convention).   The Canada Convention defines a resident as

follows:

     1. For the purposes of this Convention, the term
     "resident of a Contracting State" means any person who,
     under the laws of that State, is liable to tax therein
     by reason of his domicile, residence, place of
     management, place of incorporation or any other
     criterion of a similar nature * * *
                                - 7 -


Id. Art. IV, par. 1.2    During 1990, petitioner was a resident of

the United States because he retained resident alien immigration

status.   See sec. 7701(b)(1)(A)(i); sec. 301.7701(b)-1(b)(1),

Proced. & Admin. Regs.    Petitioners, however, must also show that

petitioner was a Canadian resident on the basis of Canadian law.

Canada Convention Art. IV, par. 2.

     Rule 146 provides that a party who intends to raise a

foreign law issue in this Court:

     shall give notice in the pleadings or other reasonable
     written notice. The Court, in determining foreign law,
     may consider any relevant material or source, including
     testimony, whether or not submitted by a party or
     otherwise admissible. The Court's determination shall
     be treated as a ruling on a question of law.

     The notes to the Rules explain that "This rule is taken

almost verbatim from FRCP 44.1."    60 T.C. 1137.   We have

interpreted Rule 146 by referring to cases interpreting rule 44.1

of the Federal Rules of Civil Procedure.    See Owens-Illinois,

Inc. v. Commissioner 76, T.C. 493, 495-496 (1981).     Although rule

44.1 allows the court to look beyond the representations of the

parties regarding foreign law, it does not impose upon the court



2
     On Aug. 31, 1994, the United States and Canada signed a
third protocol to the treaty. A revised protocol was signed by
the United States and Canada on Mar. 17, 1995, and replaced the
protocol signed during August 1994. The revised protocol
modified the definition of resident contained in Art. IV. The
new definition, however, is not applicable to the year in issue.
     During July 1997, a fourth protocol between the United
States and Canada was signed in Ottawa. On June 8, 1998, the IRS
announced that the United States had recently exchanged
instruments of ratification for the fourth protocol with Canada.
Announcement 98-47, 1998-23 I.R.B. 5.
                               - 8 -


a duty to independently research foreign law.    See Twohy v. First

Natl. Bank, 758 F.2d 1185, 1193 (7th Cir. 1985) (construing rule

44.1 of the Federal Rules of Civil Procedure).    In MacLean v.

Commissioner, 73 T.C. 1045, 1053 (1980), this Court refused to

hold that a taxpayer who offered no evidence of United Kingdom

law was a United Kingdom resident for tax purposes.

     In the instant case, petitioners did not introduce or cite

any Canadian law on the issue of residency either at trial or in

their briefs.   Even in the instant motion for reconsideration,

petitioners failed to cite a single Canadian statute, regulation,

or case which would be relevant precedent on the issue of

residency for Canadian tax purposes.    In their reply brief and in

the instant motion, petitioners cite only Interpretation Bulletin

IT-221R2 issued by Revenue Canada.     That bulletin represents the

position of Revenue Canada, the Canadian tax administrator, and

"does not have the binding effect of law".     Mattabi Mines Ltd. v.

Minister of Revenue (Ontario) (1988) 53 D.L.R. (4th) 656, 664.

Because petitioners failed to present this Court with any

reference to authoritative Canadian law, it was not substantial

error for this Court to find that petitioner was not a Canadian

resident under Canadian law and therefore refuse to apply the

Canada Convention in the instant case.    For that reason, we deny

petitioners' motion for reconsideration.

     Moreover, even if we were to accept petitioners' contention

that petitioner was a Canadian resident under Canadian law and
                               - 9 -


applied the "tie breaker" rules of the Canada Convention that, as

we stated in our prior opinion, would determine petitioner's

residence for Federal income tax purposes, it is not clear that

petitioners would have established that petitioner was a

Canadian, as opposed to a U.S., resident during 1990.    Art. IV,

par. 2 of the Canada Convention provides:

          2. Where by reason of the provisions of paragraph
     1 an individual is a resident of both Contracting
     States, then his status shall be determined as follows:

              (a) He shall be deemed to be a resident
          of the Contracting State in which he has a
          permanent home available to him; if he has a
          permanent home available to him in both
          States or in neither State, he shall be
          deemed to be a resident of the Contracting
          State with which his personal and economic
          relations are closer ([center] of vital
          interests);

              (b) If the Contracting State in which he
          has his [center] of vital interests cannot be
          determined, he shall be deemed to be a
          resident of the Contracting State in which he
          has an habitual abode;

              (c) If he has an habitual abode in both
          States or in neither State, he shall be
          deemed to be a resident of the Contracting
          State of which he is a citizen; and

              (d) If he is a citizen of both States or
          of neither of them, the competent authorities
          of the Contracting States shall settle the
          question by mutual agreement.

     Accordingly, the Convention provision would require a

decision as to whether petitioner had a permanent home available

to him in either the United States or Canada, or both of them,

during 1990.   The Model Double Taxation Convention on Income and
                              - 10 -


on Capital, Report of the Organization for Economic Cooperation

and Development (OECD) Committee on Fiscal Affairs Art. 4, par. 2

(1977) (Model Treaty), contains substantially the same language

as the above-quoted Art. IV., par. 2 of the Canada Convention.

The commentary to the Model Treaty (commentary) further explains

the requirements of Model Treaty Art. 4.3   Because both the

United States and Canada were OECD members when the Model Treaty

and the commentary were drafted, courts have used the commentary

to interpret income tax treaties between the United States and

Canada.   See United States v. A.L. Burbank & Co., 525 F.2d 9, 15

(2d Cir. 1975); North W. Life Assurance Co. of Canada v.

Commissioner, 107 T.C. 363 (1996); see also Taisei Fire & Marine

Ins. Co. v. Commissioner, 104 T.C. 535, 546 (1995) (construing

the Convention for the Avoidance of Double Taxation and the

Prevention of Fiscal Evasion with Respect to Taxes on Income,

Mar. 8, 1971, U.S.-Japan, 23 U.S.T. 969, with reference to the

Model Treaty and its commentary).

     The commentary to Article 4, pars. 12 and 13 of the Model

Treaty explains the term "permanent home" as follows:

     [T]his home must be permanent, that is to say, the
     individual must have arranged and retained it for his
     permanent use as opposed to staying at a particular



3
     Both the Model Treaty and the commentary have been
subsequently modified by the Model Double Taxation Convention on
Income and on Capital, Report of the Organization for Economic
Cooperation and Development Committee on Fiscal Affairs (1997).
However, Art. 4, par. 2, of the Model Treaty and its commentary
have remained substantially the same since 1977.
                              - 11 -


     place under such conditions that it is evident that the
     stay is intended to be of short duration.
          As regards the concept of home, it should be
     observed that any form of home may be taken into
     account * * *. But the permanence of the home is
     essential; this means that the individual has arranged
     to have the dwelling available to him at all times
     continuously, and not occasionally for the purpose of a
     stay which, owing to the reasons for it, is necessarily
     of short duration * * *.

     In the instant case, because the family home in Montreal was

available to him continuously during 1990, it appears that

petitioner had a permanent home in Canada.   Several facts tend to

show that the Montreal home was petitioner's permanent home:

Petitioner had his own room in the home, where he stored many of

his personal belongings; petitioner kept his two cars in the

garage at the home; and petitioner maintained an office at the

home which he shared with his brother Stephen D. Podd.

     Because Ms. Cohen's apartment in Fort Lauderdale was

available to petitioner continuously during 1990, however, it

also appears that petitioner had a permanent home in the United

States.   Several facts tend to show that Ms. Cohen's apartment

was petitioner's permanent home:   Petitioner stayed at Ms.

Cohen's apartment on his frequent trips to Florida; petitioner

conducted business out of Ms. Cohen's apartment for which he used

a desk, a fax machine, and a mobile phone which he had installed

in the apartment; petitioner kept a car in Florida and docked his

boat at the marina servicing Ms. Cohen's apartment; and

petitioner listed the address of Ms. Cohen's apartment as his own

address on the insurance policy covering his boat and on his
                                - 12 -


Florida driver's license.   On the basis of the foregoing, it

could be concluded that, during 1990, petitioner had a permanent

home in both the United States and Canada.

     In such circumstances, the commentary to Article 4, par. 15

of the Model Treaty explains:

          If the individual has a permanent home in both
     Contracting States, it is necessary to look at the
     facts in order to ascertain with which of the two
     States his personal and economic relations are closer.
     Thus, regard will be had to his family and social
     relations, his occupations, his political, cultural or
     other activities, his place of business, the place from
     which he administers his property, etc. The
     circumstances must be examined as a whole, but it is
     nevertheless obvious that considerations based on the
     personal acts of the individual must receive special
     attention. If a person who has a home in one State
     sets up a second in the other State while retaining the
     first, the fact that he retains the first in the
     environment where he has always lived, where he has
     worked, and where he has his family and possessions,
     can, together with other elements, go to demonstrate
     that he has retained his [center] of vital interests in
     the first State.

Accordingly, the convention would require a decision as to the

location of petitioner's "[center] of vital interest" during

1990.

     It is unclear to us where petitioner's "[center] of vital

interest" was located during 1990.       Several facts tend to show

that petitioner's "[center] of vital interest" was in Canada:

Petitioner was born and raised in Canada, and during 1990,

petitioner's parents and brother resided in Canada.       Powertex

Plus was incorporated in Canada and part of petitioner's

activities on behalf of Powertex Plus was communicating with
                               - 13 -


suppliers in Montreal; petitioner retained his Montreal driver's

license and registered his vehicles in Canada; petitioner had

Canadian health insurance and was attended by a Canadian doctor

and a Canadian dentist; and petitioner maintained bank accounts

at Canadian banks and membership at a Canadian health club.

     At the same time the record contains facts that tend to show

that, during 1990, petitioner's "[center] of vital interest" was

in the United States.    Ms. Cohen, whom petitioner married during

1991, lived in Florida; Powertex and Powertex, S.C., were

incorporated in the United States, and petitioner retained

supervisory power over Powertex, Powertex Plus, and Powertex S.C.

facilities in the United States; all of the holdings of Podd

Family Associates and Fort Montgomery Estates were in the United

States; and petitioner obtained a Florida driver's license.

Given petitioner's strong ties to both the United States and

Canada during 1990, it appears that, in applying the Canada

Convention and the commentary to the Model Treaty, there would be

doubt as to which location was petitioner's "[center] of vital

interest."

     In case of doubt as to the location of the "[center] of

vital interest," the commentary to Article 4, par. 17 of the

Model Treaty explains:

     In * * * the case where the individual has a permanent
     home available to him in both States, the fact of
     having an habitual abode in one State rather than in
     the other * * * in case of doubt as to where the
     individual has his [center] of vital interests, tips
     the balance towards the State where he stays more
                              - 14 -


     frequently. For this purpose regard must be had to
     stays made by the individual not only at the permanent
     home in the State in question but also at any other
     place in the same State.

     Accordingly, where doubt exists as to an individual's

"[center] of vital interest", the commentary tips the balance in

favor of the country where the individual stays most frequently.

During 1990, petitioner spent only 120 days in Montreal; he spent

the remainder of the year in the United States, including 160

days in Florida and 50 days in South Carolina.    Because

petitioner spent more time in the United States than in Canada

during 1990, it appears that petitioner had a habitual abode in

the United States.   On the basis of the analysis above, we think

that, even if we had applied the Canada Convention in the instant

case, petitioners would not have established that petitioner was

a Canadian, as opposed to a U.S., resident for tax purposes

during 1990.

     We have carefully considered the parties' remaining

arguments and find them to be either without merit or unnecessary

to reach.   Because petitioners have not shown that this Court

committed substantial error in deciding the instant case, we deny

petitioners' motion for reconsideration.

     On the basis of the foregoing,


                                           An appropriate order

                                      will be issued.
