CEA International Estate Considerations 4

Question 1

A non-resident alien decedent owned a US brokerage account containing corporate bonds and stock in a US company. Which asset is subject to US estate tax?

Accepted Answer

The US corporate stock only

Answer

US corporate stock is US-situs property subject to US estate tax for non-resident aliens, while US corporate bonds are exempt as 'portfolio interest' under the portfolio debt exception.

Question 2

Under FATCA, foreign financial institutions (FFIs) must report accounts held by US persons to the IRS. What happens if an FFI does not comply?

Accepted Answer

A 30% withholding tax is imposed on certain US-source payments to the FFI

Answer

Non-compliant FFIs are subject to a 30% withholding tax on withholdable payments from US sources, creating a strong incentive for compliance.

Question 3

A US citizen living abroad (expatriate) owns property in France and dies. Which factor is MOST critical in determining whether French inheritance tax applies?

Accepted Answer

The location (situs) of the French property and the decedent's French tax residency

Answer

France taxes inheritance based on the situs of the property and/or the domicile of the decedent or heirs, making these the most critical factors.

Question 4

What is 'estate tax situs' as it relates to intangible personal property owned by a non-resident alien?

Accepted Answer

Intangible property situs is generally determined by where the issuing entity is domiciled or incorporated

Answer

For estate tax purposes, the situs of intangible property such as stock is typically the state or country where the corporation is incorporated or domiciled.

Question 5

A client renounces US citizenship to avoid future US estate and gift taxes. Which law imposes an exit tax on certain long-term residents and citizens who expatriate?

Accepted Answer

The Heroes Earnings Assistance and Relief Tax Act (HEART Act) of 2008

Answer

The HEART Act of 2008 (IRC Sections 877A and 2801) imposes a mark-to-market exit tax on covered expatriates and a tax on US persons who receive gifts or bequests from covered expatriates.

(CEA) Certified Estate Advisor Practice Test

(CEA) Certified Estate Advisor Practice Test

CEA International Estate Considerations 4