Los Angeles Income Tax and Estate Planning Attorney Bruce Givner: What Creates U.S. Domicile for Estate and Gift Tax Purposes?

by Bruce Givner on July 5, 2012

“Knowing who is a U.S. resident for estate and gift tax purposes is critical,” noted Los Angeles Estate and Tax Attorney Bruce Givner.

A person is a non-citizen of the U.S. for income tax purposes if that person is domiciled in the U.S.  An individual is domiciled in the U.S. if he or she lives in the U.S., even for a brief period, without any definite or present intention of moving.  IRC Regs. Sec. 20.0-1(b)(1).  “If an individual’s place of domicile is in question, the facts and circumstances, such as where the individual’s driver’s registration, home, and bank account are located, will be reviewed to determine if the individual has a substantial presence in the U.S.,” noted Givner who represents income tax and estate planning clients throughout Los Angeles County.

For estate tax purposes, the estate of a non-citizen, non-resident is liable for U.S. estate tax on property located (situated) in the U.S.  U.S. property for this purpose includes real property, stock in U.S. companies, debt obligations of U.S. persons, and tangible property, such as a work of art.  Because of the 2012 $5,120,000 lifetime transfer tax exemption is scheduled to go down to $1,000,000 on January 1, 2013, a non-citizen non-resident whose estate exceeds $1,000,000 should consider engaging in sophisticated estate tax planning.

For gift tax purposes, a non-citizen, non-resident is only subject to tax on transfers of U.S.-situs real property and tangible personal property located in the U.S.  Therefore, the person described in the preceding paragraph may reduce his or her estate by transferring stock in U.S. companies and debt obligations of U.S. persons without generating a gift tax obligation.”

Seek the guidance of an experienced U.S. income tax and estate planning attorney.

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Givner & Kaye focuses on income tax planning and asset protection plans in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles County.  On the first and third Thursday of every month, Givner & Kaye hosts its MCLE & CE accredited series - "Thursday Insights."   If you have questions regarding passive losses, call Los Angeles Tax Attorneys Givner & Kaye at (310) 207-8008 today.

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