law foreign tax credit provisions of Japan and the United States, idso operate to…

any potential for double taxation. However, in the remaining cases, the domestic law foreign tax credit provisions of Japan and the United States (including limitationsrelated to carryforward or carryback periods and limitationsrelated to differences in the characterization of items of income or gain) and the rules in the Convention, in particular the rule included in paragraph 10 of the Protocol, that allocate taxing jurisdiction between Japan and the United States may not operate to completely alleviate double taxation. With respect to these cases, pursuant to paragraph 10 of the Protocol, the competent authorities of Japan and the United States will, through a mutual agreement procedure, provide measures for the elimination of double taxation at the time of sale of the underlying stock, including the allowance of a foreign tax credit for taxes paid to the source country at the time of exercise or sale that are imposed in accordance with Article 14 and paragraph 10 of the Protocol.