Capital Gains The standard U.S. tax treaty up to now has not restricted the jurisdiction of the United States to tax the capital gains of foreigners. On the other hand. the OECD draft convention. following the European treaties. restricts taxation of capital gains to the country of residence. other than gains on real property and property forming a part of a permanent establishment. In considering some of our earlier treaties. the Senate was unwilling to relinquish U.S. tax jurisdiction in this area. influenced partly by the scope of trading activities conducted in this country by World War II refugees. Therefore the United States originally entered a reservation on this subject. Recently. however. we have been exploring the desirability of the OECD approach.
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refugees