Gifts And Bequests From A Former US Person: Avoiding A 40% Tax Payable By The Recipient

<p>June 27, 2023 - Participants include:</p> <p>Virginia La Torre Jeker - <a href='https://www.twitter.com/vljeker'>@VLJeker</a></p> <p>John Richardson - <a href='https://www.twitter.com/expatriationlaw'>@Expatriationlaw</a></p> <p>As more and more people renounce U.S. citizenship or surrender their Green Cards the will take steps to avoid being a "Covered Expatriate".</p> <p>A "<a href='http://citizenshipsolutions.ca/2015/04/03/part-3-the-exit-tax-affects-covered-expatriates-what-is-a-covered-expatriate/'>Covered Expatriate</a>" is an individual (subject to few exceptions) who meets any one of the following three tests:</p> <p>- net worth in excess of 2 million USD</p> <p>- U.S. tax liability exceeding an average of $190,000 USD in the five years prior to renunciation</p> <p>- failure to certify U.S. tax compliance for the five years prior to renunciation.</p> <p>The consequences of being a "Covered Expatriate" are two-fold:</p> <p>1. Being subject to the <a href='http://citizenshipsolutions.ca/2015/04/01/renouncing-us-citizenship-how-the-s-877a-exit-tax-may-apply-to-your-canadian-assets-5-parts/'>877A Expatriation Tax</a></p> <p>2. Gifts/bequests made to "U.S. Persons" being subjected to a 40% tax (payable by the recipient of the gift) as per <a href='https://www.law.cornell.edu/uscode/text/26/2801'>S. 2801 of the Internal Revenue Code</a>.</p> <p>It's important that the recipient of the gift be able to prove that the gift/bequest was NOT received by a "Covered Expatriate".</p> <p>In this podcast we discuss common sense steps that can (and should) be taken to meet the burden of proof of showing that the gift/bequest was NOT received from a "Covered Expatriate".</p> <p> </p>