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Exit Tax for U.S. Expatriates to Become Law
Posted: Saturday, August 13, 2011

Posted: 10/11/2009 8:50:55 AM

By: David S. Lesperance

You are a little behind the times, this came into being in Q2 of 2008. The result is a deemed disposition at the time of expatriation. This is a triggering of capital gains, which is the same that happens when an American dies. The difference for the wealthy is that there is not then an estate tax applied on the remainder.

Given that portfolios have been lower as a result of the fiscal crisis, many people have decided that it is the perfect time to trigger a deemed disposition as a result of an expatriation. They have then enjoyed the return of their portoflio value in a tax free environment.

With regards to the attempt to capture estate tax in the hands of U.S. heirs, basic succession planning easily overcome this tax grab.

I have many people who bemoan the fact that the "cost" of expatriation is greater in 2009 than in 1993. True but to quote the great modern philosopher Judge Judy, "Woulda, Coulda, Shoulda...You can't change the past. The real question is what are you going to do about the future!" The only reasonable guess I can make is that while it is more expensive to expatriate in 2009 than in 1993, it will probably be cheaper than expatriating in 2012. In addition, you will have the cost of paying full U.S. tax until that time.

David S. Lesperance
Barrister and Solicitor

Internal Administrator
Posted: Saturday, August 13, 2011
Joined: 10/12/2010
Posts: 5780

Posted: 10/9/2009 5:58:04 AM

By: Tax expat

"New rules will impose tax on expatriates and withholding requirements on trustees

Giving up a U.S. passport will soon carry a steep price tag. A new law passed by the U.S. Congress and sent to the President will subject certain individuals who expatriate or give up their green cards to immediate tax on the inherent gain on all of their worldwide assets and a tax on future gifts or bequests made to a U.S. citizen or resident."


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