Title 26Internal Revenue CodeRelease 119-73

§2107 Expatriation to Avoid Tax

Title 26 › Subtitle Subtitle B— Estate and Gift Taxes › Chapter 11— ESTATE TAX › Subchapter B— Estates of Nonresidents Not Citizens › § 2107

Last updated Apr 6, 2026|Official source

Summary

When someone who gave up U.S. citizenship dies as a nonresident while still covered by the expatriation tax rules of section 877(b), their U.S. estate is taxed using the regular estate tax table. The estate can also be pulled in further: if the person owned 10 percent or more of the voting stock of a foreign corporation, and more than 50 percent of its voting power or value counting attribution rules, part of that foreign stock can be included in the taxable estate. A credit of $13,000 is allowed against the tax, and credits are also allowed for foreign death taxes actually paid on property included only because of these rules, within limits. If the IRS shows it is reasonable to believe the person gave up citizenship in a way that would have sharply cut these taxes, the estate's executor must prove that tax avoidance was not a principal purpose.

Full Legal Text

Title 26, §2107

Internal Revenue Code — Source: USLM XML via OLRC

(a)A tax computed in accordance with the table contained in section 2001 is hereby imposed on the transfer of the taxable estate, determined as provided in section 2106, of every decedent nonresident not a citizen of the United States if the date of death occurs during a taxable year with respect to which the decedent is subject to tax under section 877(b).
(b)For purposes of the tax imposed by subsection (a), the value of the gross estate of every decedent to whom subsection (a) applies shall be determined as provided in section 2103, except that—
(1)if such decedent owned (within the meaning of section 958(a)) at the time of his death 10 percent or more of the total combined voting power of all classes of stock entitled to vote of a foreign corporation, and
(2)if such decedent owned (within the meaning of section 958(a)), or is considered to have owned (by applying the ownership rules of section 958(b)), at the time of his death, more than 50 percent of—
(A)the total combined voting power of all classes of stock entitled to vote of such corporation, or
(B)the total value of the stock of such corporation,
(c)(1)(A)A credit of $13,000 shall be allowed against the tax imposed by subsection (a).
(B)The credit allowed under this paragraph shall not exceed the amount of the tax imposed by subsection (a).
(2)(A)The tax imposed by subsection (a) shall be credited with the amount of any estate, inheritance, legacy, or succession taxes actually paid to any foreign country in respect of any property which is included in the gross estate solely by reason of subsection (b).
(B)The credit allowed by subparagraph (A) for such taxes paid to a foreign country shall not exceed the lesser of—
(i)the amount which bears the same ratio to the amount of such taxes actually paid to such foreign country as the value of the property subjected to such taxes by such foreign country and included in the gross estate solely by reason of subsection (b) bears to the value of all property subjected to such taxes by such foreign country, or
(ii)such property’s proportionate share of the excess of—
(I)the tax imposed by subsection (a), over
(II)the tax which would be imposed by section 2101 but for this section.
(C)In the case of property which is included in the gross estate solely by reason of subsection (b), such property’s proportionate share is the percentage which the value of such property bears to the total value of all property included in the gross estate solely by reason of subsection (b).
(3)The tax imposed by subsection (a) shall be credited with the amounts determined in accordance with subsections (a) and (b) of section 2102. For purposes of subsection (a) of section 2102, section 2012 and 2013 shall be applied as if the credit allowed under paragraph (1) were allowed under section 2010.
(d)If the Secretary establishes that it is reasonable to believe that an individual’s loss of United States citizenship would, but for this section, result in a substantial reduction in the estate, inheritance, legacy, and succession taxes in respect of the transfer of his estate, the burden of proving that such loss of citizenship did not have for one of its principal purposes the avoidance of taxes under this subtitle or subtitle A shall be on the executor of such individual’s estate.
(e)For comparable treatment of long-term lawful permanent residents who ceased to be taxed as residents, see section 877(e).

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

2004—Subsec. (a). Pub. L. 108–357 reenacted heading without change and amended text of subsec. (a) generally, substituting provisions relating to imposition of tax on the transfer of the taxable estate of every decedent nonresident not a citizen of the United States if the date of death occurs during a taxable year with respect to which the decedent is subject to tax under section 877(b), for provisions relating to imposition of tax on the transfer of the taxable estate of every decedent nonresident not a citizen of the United States if, within the 10-year period ending with the date of death, such decedent lost United States citizenship, unless such loss did not have for one of its principal purposes the avoidance of taxes, and provisions describing individuals to be treated as having a principal purpose to avoid taxes. 2001—Subsec. (c)(3). Pub. L. 107–16 substituted “2012 and 2013” for “2011 to 2013, inclusive,”. 1997—Subsec. (c)(2)(B)(i). Pub. L. 105–34, § 1602(g)(6)(A), substituted “such foreign country as the value of the property subjected to such taxes by such foreign country and” for “such foreign country in respect of property included in the gross estate as the value of the property”. Subsec. (c)(2)(C). Pub. L. 105–34, § 1602(g)(6)(B), amended heading and text of subpar. (C) generally. Prior to amendment, text read as follows: “For purposes of subparagraph (B), a property’s proportionate share is the percentage of the value of the property which is included in the gross estate solely by reason of subsection (b) bears to the total value of the gross estate.” 1996—Subsec. (a). Pub. L. 104–191, § 511(e)(1)(A), substituted “Treatment of expatriates” for “Rate of tax” in heading and amended text generally. Prior to amendment, text read as follows: “A tax computed in accordance with the table contained in section 2001 is hereby imposed on the transfer of the taxable estate, determined as provided in section 2106, of every decedent nonresident not a citizen of the United States dying after
November 13, 1966, if after
March 8, 1965, and within the 10-year period ending with the date of death such decedent lost United States citizenship, unless such loss did not have for one of its principal purposes the avoidance of taxes under this subtitle or subtitle A.” Subsec. (b)(2). Pub. L. 104–191, § 511(e)(1)(C), substituted “more than 50 percent of—” for “more than 50 percent of the total combined voting power of all classes of stock entitled to vote of such foreign corporation,” and added subpars. (A) and (B). Subsec. (c)(2), (3). Pub. L. 104–191, § 511(e)(1)(B), added par. (2) and redesignated former par. (2) as (3). Subsec. (d). Pub. L. 104–191, § 511(f)(2)(A), redesignated subsec. (e) as (d) and struck out former subsec. (d) which read as follows: “(d) Exception for Loss of Citizenship for Certain Causes.—Subsection (a) shall not apply to the transfer of the estate of a decedent whose loss of United States citizenship resulted from the application of section 301(b), 350, or 355 of the Immigration and Nationality Act, as amended (8 U.S.C. 1401(b), 1482, or 1487).” Subsec. (e). Pub. L. 104–191, § 511(f)(2)(A), added subsec. (e). Former subsec. (e) redesignated (d). 1976—Subsec. (a). Pub. L. 94–455, § 1902(a)(6), substituted “
November 13, 1966” for “the date of enactment of this section” after “dying after”. Subsec. (c). Pub. L. 94–455, § 2001(c)(1)(E)(ii), substituted provisions relating to unified credit for “The tax imposed by subsection (a) shall be credited with the amounts determined in accordance with section 2102.” Subsec. (e). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

Statutory Notes and Related Subsidiaries

Effective Date

of 2004 AmendmentAmendment by Pub. L. 108–357 applicable to individuals who expatriate after June 3, 2004, see section 804(f) of Pub. L. 108–357, set out as a note under section 877 of this title.

Effective Date

of 2001 AmendmentAmendment by Pub. L. 107–16 applicable to estates of decedents dying, and generation-skipping transfers, after Dec. 31, 2004, see section 532(d) of Pub. L. 107–16, set out as a note under section 2012 of this title.

Effective Date

of 1997 AmendmentAmendment by Pub. L. 105–34 effective as if included in the provisions of the Health Insurance Portability and Accountability Act of 1996, Pub. L. 104–191, to which such amendment relates, see section 1602(i) of Pub. L. 105–34, set out as a note under section 26 of this title.

Effective Date

of 1996 AmendmentAmendment by Pub. L. 104–191 applicable to individuals losing United States citizenship on or after Feb. 6, 1995, and to long-term residents of the United States with respect to whom an event described in section 877(e)(1)(A) or (B) of this title occurs on or after Feb. 6, 1995, with special rule for certain individuals who performed an act of expatriation specified in section 1481(a)(1)–(4) of Title 8, Aliens and Nationality, before Feb. 6, 1995, see section 511(g) of Pub. L. 104–191, set out as a note under section 877 of this title.

Effective Date

of 1976 AmendmentAmendment by section 1902(a)(6) of Pub. L. 94–455 applicable in the case of estates of decedents dying after Oct. 4, 1976, see section 1902(c)(1) of Pub. L. 94–455, set out as a note under section 2012 of this title. Amendment by section 2001(c)(1)(E)(ii) of Pub. L. 94–455 applicable to estates of decedents dying after Dec. 31, 1976, see section 2001(d)(1) of Pub. L. 94–455, set out as a note under section 2001 of this title.

Effective Date

Section applicable with respect to estates of decedents dying after Nov. 13, 1966, see section 108(i) of Pub. L. 89–809, set out as an

Effective Date

of 1966 Amendment note under section 2101 of this title.

Reference

Citations & Metadata

Citation

26 U.S.C. § 2107

Title 26Internal Revenue Code

Last Updated

Apr 6, 2026

Release point: 119-73