§2801 Imposition of Tax

Summary

If a United States citizen or resident gets property during a calendar year that came from someone who was a “covered expatriate,” they must pay a tax. The tax equals the highest rate shown in the table at section 2001(c) on the date they get it, multiplied by the value of that property. The person who receives the property must pay this tax. The tax only applies after the total value of covered gifts and bequests a person gets in that year is more than the dollar amount set in section 2503(b). Any gift or estate tax paid to a foreign country for the same property reduces the U.S. tax. “Covered gift or bequest” means property received by gift from, or because of the death of, an individual who was a covered expatriate at that time. It does not include property already reported on a timely gift return under chapter 12 or included and reported in the decedent’s gross estate under chapter 11, nor property that would be deductible under sections 2055, 2056, 2522, or 2523 if the donor or decedent were a U.S. person. If the recipient is a domestic trust, the trust is treated like a U.S. citizen and must pay the tax. If the recipient is a foreign trust, any distribution from that trust to a U.S. person is treated as a covered gift or bequest; tax paid by the U.S. person because of such a distribution can be deducted under section 164 to the extent the distribution is included in their income. A foreign trust may elect to be treated as domestic and may revoke that election with the Secretary’s consent. “Covered expatriate” has the meaning given in section 877A(g)(1).