The IRS recently released a set of proposed regulations for section 2801 of the Internal Revenue Code which applies to gifts by those that have renounced US citizenship or permanent residence. 2801 will impose the maximum gift/estate tax rate on all property received by US citizens from expatriates that are covered by the law. The fair market value of the gift will be used to calculate the tax but may be reduced by the annual exclusion or for taxes paid on the gift in a foreign nation. The seven new regulations include definitions of key terms, instructions of the applicability of the law to certain persons, and explains the responsibilities of those that receive a qualifying gift. With an increasing number of Americans renouncing their citizenship, these regulations may become important for a great many individuals and their estate planners.
See Dina Kapur Sanna, IRS Issues Proposed Regs Taxing Gifts and Bequests From Covered Expatriates, Wealth Management, September 22, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
