jmail7[at]andrewmitchel.com wrote:
- quote -

I actually called IRS yesterday as I am getting more
concerned. The answer was the debt obligation is intangible
asset as well as stock rights and since my mom is non
resident non citizen it is considered not situated in US
even though the debt is to a US company and therefore is not
subject to US gift tax law.

Thanks for the help.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

- quote -

I've looked into this issue a bit more and posted elsewhere
in this thread more specific information with citations to
statutes.

The bottom line is that if your mom was not a US citizen
within the last ten years the gift itself is probably not
taxed. But it will be brought back into her estate for tax
purposes if she dies within three years, and may be brought
back even after that.

Stu

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

jmail7[at]andrewmitchel.com wrote:

- quote -

Section 2101 imposes a tax on the estate of every
non-citizen non- resident of the US.

The tax is not just on the estate, but also on "the amount
of the adjusted taxable gifts...." The statute goes on to
say that adjusted taxable gifts means gifts "made by the
decedent after December 31, 1976, other than gifts which are
includible in the gross estate of the decedent."

Section 2104 brings back into the taxable estate all gifts
(under sections 2035 through 2038) made within three years
of death. But it looks like section 2101 includes even
older gifts under some circumstances.

Section 2103 says, "For the purpose of the tax imposed by
section 2101, the value of the gross estate of every
decedent nonresident not a citizen of the United States
shall be that part of his gross estate (determined as
provided in section 2031) which at the time of his death is
situated in the United States."

And section 2031 says, "The value of the gross estate of the
decedent shall be determined by including to the extent
provided for in this part, the value at the time of his
death of all property, real or personal, tangible or
intangible, wherever situated."

So it would appear that intangible property is also
included, if it's considered to be "situated in the United
States."

In this case the property is a debt owed, presumably by
someone located in the US to the foreign resident. Section
2104 says that, "debt obligations of— (1) a United States
person ... owned and held by a nonresident not a citizen of
the United States shall be deemed property within the United
States."

As far as the gift tax aspects, section 2501(a)(2) says,
"Except as provided in paragraph (3), paragraph (1) shall
not apply to the transfer of intangible property by a
nonresident not a citizen of the United States." So far so
good.

But then section 2511(b) goes on to say that, "in the case
of a nonresident not a citizen of the United States who is
excepted from the application of section 2501 (a)(2)... debt
obligations of— (A) a United States person... which are
owned and held by such nonresident shall be deemed to be
property situated within the United States."

This last rule is there because the gift tax is imposed on
expatriots (those who lost US citizenship within the last
ten years unless it proven not to have been for purposes of
avoidance of US tax) whether the property is tangible or
intangible.

In short, the gift tax excludes gifts of intangible property
from non-citizen non-residents who are not expatriots of the
US. But the estate tax includes such gifts, even past
gifts.

Stu

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

- quote -

Can you point me to the regulations? I want to do more
research on this. But i am not sure where i can find out the
related tax topics at IRS website.

Thanks

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

- quote -

My understanding is the same as WUJQ. The property must be
tangible property located in the U.S. to be subject to gift
tax, unless the NRA has expatriated and is subject to Sec.
877. Sec. 2501(a)(2). The rule is different for estate
taxes. Sec. 2103 & 2104.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

wujqing[at]hotmail.com wrote:
- quote -

With respect to property located in the US, including stock
in a US company, gift of that property is considered
taxable. I haven't researched the precise issue of a gift
of loans receivable, but if the debtor is based in the US,
it is probably considered a US based asset. So it is subject
to gift tax even if the donnor is not a US resident or
citizen.

Stu

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Stuart A. Bronstein wrote:
- quote -

But I thought if the gifter is a Non-resident alien, only
tangible assets is subject to US gift tax?

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

wujqing[at]hotmail.com wrote:

- quote -

If the loan is to a US company, it may well be considered a
taxable gift to you, whether in the form of a loan or a
partnership interest. It's a US asset so is subject to US
gift tax.

Stu

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

My mom invested 100k in a start up company in the form of
loans receivable. She plans to gift that to me, do i need
to file form 3520 when she give it to me? She is a
non-resident alien and I suppose she is not subject to US
tax if the gift is intangible asset. Does loan receivable
qualify as intangible asset? If she wait till the loan
receivable is converted to partnership interest and gift
that to me, would that have a different tax impact?

Thank you a bunch for your help!

Appleseed

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >