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Expatriating long-term residents need clarification.

Publication: The Tax Adviser
Publication Date: 01-MAY-02 		Format: Online - approximately 932 words
Delivery: Immediate Online Access

Article Excerpt
Before the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Sec. 877 would have applied only to U.S. citizens who had renounced or otherwise lost their citizenship (expatriated), if one of their principal purposes for doing so was to avoid paying tax. An expatriating taxpayer subject to Sec. 877 is taxed under Sec. 1 (regular tax) or Sec. 55 (alternative minimum tax), rather than under Sec. 871, for 10 years following his departure. Special sourcing rules apply under Sec. 877(d)(1). A nonresident alien is in most instances not liable for tax on portfolio interest under Sec. 871(h) or can sell stock issued by a U.S. company free of U.S. tax under the general sourcing rules of Sec. 865(a)(2) (if there were no Sec. 871 (a) (2) issue). However, an expatriating U.S. citizen (by definition, now a nonresident alien)...

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