Exit Tax for U.S. Expatriates Becomes Law

The new tax regime applies to certain individuals who relinquish their US citizenship and certain long-term U.S. residents (i.e., green card holders) who terminate their U.S. residence (hereafter referred to as ‘expatriates’). The so-called ‘mark-to-market’ tax will apply to the net unrealized gain on the expatriate’s worldwide assets as if such property were sold (the ‘deemed sale’) for its fair market value on the day before the expatriation date.  Any net gain on this deemed sale in excess of US$600,000 will be taxable.

In addition, trustees of non-grantor trusts must withhold and pay over to the IRS 30 percent of the portion of any distribution (whether direct or indirect) that would have been taxable to the expatriate had he not expatriated.  Failure to withhold the tax could subject the trustee to direct liability for the unpaid U.S. tax. >>>>>


One Response to Exit Tax for U.S. Expatriates Becomes Law

  1. Tax Lawyer says:

    I’ve been involved in taxes for lengthier then I care to acknowledge, both on the personal side (all my working life!!) and from a legal point of view since passing the bar and pursuing tax law. I’ve supplied a lot of advice and righted a lot of wrongs, and I must say that what you’ve put up makes complete sense. Please carry on the good work – the more people know the better they’ll be armed to deal with the tax man, and that’s what it’s all about.

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