Patrick McCormick, a partner in Culhane Meadows’ Philadelphia office, recently authored an article for Tax Notes explores the threshold considerations for nonresidents of the United States and options for ownership of U.S. assets and the benefits and consequences of each.
Here are some excerpts from Patrick’s interview:
A growing number of nonresidents — those classified for U.S. tax purposes as neither American citizens nor residents of the United States — seek ownership of United States-based assets. A multitude of factors (both tax and nontax) make the United States an appealing jurisdiction for investment by foreign taxpayers. For nonresidents, an inherent part of exploring investment in the United States is consideration of U.S. tax consequences.
Tax considerations in this context are unique, and can starkly contrast with those relevant for U.S. taxpayers; critically, differences in transfer tax consequences for nonresidents make transfer tax planning vital. Now that Tax Cuts and Jobs Act provisions have doubled the lifetime gratuitous transfer exclusion for U.S. taxpayers (to $11.58 million in 2020), the need for tax-focused estate planning for domestic individuals has largely eroded. For nonresidents, however, the need for transfer tax planning has grown, and a stagnant, miniscule exemption — $60,000 for estate tax and no specific nonresident exemption for gift tax — makes thoughtful planning a necessity.
The complete article can be found here and viewed with a subscription to Tax Notes.