On January 10, 2025, the U.S. Treasury Department and the Internal Revenue Service (IRS) finalized regulations that provide guidance on the application of a tax on U.S. citizens and residents, and certain trusts, that receive gifts or bequests from covered expatriates.1 These regulations will be effective January 14, 2025, upon publication in the Federal Register.
KPMG LLP (U.S.) is currently reviewing these regulations and will be issuing more detailed analysis.
Global mobility programs with assignees inbound to or outbound from the United States may be familiar with the U.S. expatriation tax regime, under which certain individuals who relinquish U.S. citizenship or cease to be lawful permanent residents (i.e., green card holders) of the United States are considered “covered expatriates,” and subject to a market-to-market tax on the deemed sale of their property.
In addition to this mark-to-market tax, gifts and bequests of a covered expatriate are subject to a special tax. Unlike the normal transfer tax rules, which impose tax on the donor, this special tax is imposed on the gift recipient. These final regulations provide needed guidance on the application of this tax, as well as guidance on the method of reporting and paying this tax.
1 Department of the Treasury, Internal Revenue Service, Final Regulations, "Guidance under Section 2801 Regarding the Imposition of Tax on Certain Gifts and Bequests from Covered Expatriates."
The above information is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.
The information contained in this newsletter was submitted by the KPMG International member firm in the United States.
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