U.S. Estate and Gift Tax Rules for Nonresident Aliens (NRA)

Estate Taxation

The estate of a nonresident alien subject to U.S. estate tax consists only of the portion of his gross estate which is situated in the U.S. Thus, foreign situs property completely escapes U.S. estate tax, though it may be subject to foreign death taxes.

Gift Taxation

Nonresident aliens are subject to gift tax only on gifts of real estate and tangible personal property having a U.S. situs at the time of the gift. Therefore, gift tax can be completely avoided by selecting non-U.S. situs property or U.S. situs intangible property for transfer by gift. The NRA does not pay gift-tax since he or she is not subject to U.S. taxes in general, and the donee (recipient) of a gift does not pay gift taxes under general gift-tax principles. Gifts of cash, tangible property (such as jewelry or an automobile) or real property located in the U.S. are subject to U.S. gift taxes. A NRA is entitled to the annual gift-tax exclusion (currently $11,000 per year per beneficiary) for taxable gifts, but cannot use the unified estate and gift-tax exemption amount (currently $1,500,000 in the year 2004& 2005) for gifts exceeding $11,000 per year per beneficiary.

Examples of intangible property include stock, bonds, debt obligations, and bank deposits.

NOTE: U.S. company stock is not subject to gift taxes, but will be subject to estate taxes.

 
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