IN THE PROFESSION
A gift of shares of a domestic corporation,
and debt obligations of a United States
Person or of the United States or any
political subdivision thereof, are taxable
gifts of intangible property.
For married donors, gift splitting is allowed
only if both spouses are U.S. domiciliaries at
the time of the gift. The marital deduction is
also only available for gifts to a U.S. citizen.
However, gifts to a noncitizen spouse are
offset by an increased annual exclusion
indexed to $157,000 in 2020.
In the case of a gift from a nonresident
noncitizen to a U.S. citizen, the donor
may not need to file a gift tax return, but
the recipient may have separate reporting
disclosures. A U.S. domiciliary who
receives over $100,000 in a calendar year
from a nonresident noncitizen or a foreign
estate is required to file Form 3520. This
reporting requirement applies regardless
of whether the donor and the recipient are
related. Compliance with 3520 reporting
has been a focus issue for the IRS since last
year, so enforcement activity is expected to
increase in this area.
Finally, Benner shared some transfer tax
planning strategies for NDNCs who plan on
changing domicile to the United States. The
best option, in his experience, is establishing
a U.S. domestic dynasty trust for the benefit
of U.S. beneficiaries. A dynasty trust can
offer the benefit of avoiding U.S. transfer
taxes or extending the amount of time
before the assets are subject to transfer tax.
Clients with a non-U.S. spouse should also
consider transferring of non-U.S. property
to their spouse prior to becoming U.S. tax
residents.
www.atlantabar.org THE ATLANTA LAWYER
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