U.S. Assets of Nonresident Aliens

Readers

The book is written for financial advisors, including wealth managers, private bankers and advisors abroad, whose clients live outside the United States and hold assets there. It assumes a reader who manages or recommends the assets and needs to know what U.S. tax follows from each choice, during the client’s life and at death.

Where the client lives in Germany, France, Switzerland, Italy or the United Kingdom, the book gives the position of that country in short comparative sections. The conventions are read first; the statutory rules apply where no convention does.

What the book covers

Part 2 establishes the two transfer-tax regimes of the nonresident: situs, the estate tax with its credit and the conventions that modify the statutory result, a method for reading an estate tax treaty with the U.S.-U.K. convention as the worked example, and the gift tax on transfers by a nonresident donor.

Part 3 applies them to the assets a nonresident holds: the brokerage account with its withholding, documentation and estate tax position; U.S. real property from acquisition to sale and inheritance; FIRPTA; blocker structures; life insurance and annuities; digital assets; joint accounts and the consideration-furnished rule; state death and income taxes; closely held business interests passing to foreign heirs; and art and other tangible property. Part 4 turns to the European family business that operates in the United States.

Parts 5 and 6 cover the nonresident’s own return on Form 1040-NR, the refund of over-withheld tax, and the death of the nonresident client: the timeline and deadline grid of the administration, Form 706-NA, the federal transfer certificate that the custodian requires before it releases the assets, and the credits that relieve double taxation.

The book stands alone. Like each book of the series, it opens with a foundations chapter on status, situs, the treaties and the reporting forms, adapted to its readers, and gives a working summary wherever its readers must apply a rule that another book of the series treats in full.

The questions the book answers

• Which of the client’s assets are U.S.-situs property for the estate and gift tax, and which are not?
• What is the estate tax exposure with and without the applicable convention, and how is an estate tax treaty read?
• How are dividends, interest and securities gains in a U.S. brokerage account taxed and documented?
• How is U.S. real property held, rented, sold, given or inherited, and when does a blocker structure serve the client?
• How does a European family business own its U.S. subsidiary, and how do foreign tax systems treat a U.S. LLC?
• When must the nonresident file Form 1040-NR, and how is over-withheld tax recovered?
• What happens to the U.S. assets at the client’s death: Form 706-NA, the transfer certificate, the release by the custodian and the credit for tax paid in two countries?

The book and the firm’s practice

The author, Caroline E. Ashford, PhD, JD, leads Ashford International Law PC. The firm advises nonresident clients and their advisors abroad on U.S. assets, holding structures and the estate tax position under the conventions, and settles the U.S. estates of nonresident decedents, from Form 706-NA to the transfer certificate and the release of the assets. The returns are prepared within the firm.