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. >>>>>