Identifying Property Economically Owned by the Nonresident Alien Decedent

Nominal but not substantive ownership. The foreign client may be only the nominal owner and may hold the property on behalf of some other person. For example, the foreign client could hold the U.S. property as an agent for other parties, including for a corporation, or the foreign client could hold the property in some other fiduciary capacity. (See Estate of Banac v. Comm’r, 17 TC 748 (1951), acq. 1952-1 CB 1, where the Tax Court held that monies of a Yugoslav corporation deposited in the United States in the name of a nonresident alien under a power of attorney for the corporation were not includible in the nonresident alien’s estate.)

The determination of actual ownership may necessitate reference to the laws of both the domicile and property situs jurisdictions to determine whether substantive ownership rights are held in that property. The process of real ownership determination may, in turn, require reference to conflict-of-laws rules to determine which jurisdiction’s laws will enable the resolution of this inquiry.

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