Applicability of U.S. Transfer Tax to Nonresident Aliens

Scope of U.S. Estate Taxation

U.S. estate and gift taxation applies to non-resident alien transferors who have property located in the United States (referred to here as foreign clients) in addition to citizens and residents of the United States. For nonresident aliens, the gross amount subject to U.S. estate tax can be determined by reference only to property situated in the United States. (IRC § 2103. Any imposition of a transfer tax on nonresident aliens with respect to their transfers of non-U.S. assets would be both unenforceable and contrary to norms of international law.) In contrast, for U.S. citizens and residents any U.S. estate and gift tax exposure is determined by reference to personal status and not the specific location of assets. (IRC §§ 2031(a), 2511(a).)

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