Andrew Mitchel LLC

International Tax Blog - New and Interesting International Tax Issues

Covered Expatriate Flowchart


Today our sister website,, published a new flowchart regarding the term “covered expatriate” under Code § 877A.  Under this section, certain individuals that renounce their U.S. citizenship or cease to be long term U.S. residents are deemed to have sold their worldwide assets just prior to expatriation.  Tax is due on the deemed sale to the extent that net gain exceeds $627,000 (for 2010).

Only “covered expatriates” are subject to the deemed sale rules.  The flowchart guides one through the logic of whether an individual is an “expatriate” and then if the individual is a “covered expatriate.”  The flowchart does not go through the details of calculating the gain or the special rules regarding deferral of the tax, deferred compensation, deferred tax accounts, and nongrantor trusts. now has a total of 11 flowcharts, including:

  1. Section 152: Dependents (Free)
  2. Section 302: Distribution in Redemption of Stock (Free)
  3. Sections 871(h) & 881(c): Portfolio Interest Exception
  4. Section 877A(g): Covered Expatriate Under Section
  5. Section 954(d): Foreign Base Company Sales Income (Subpart F Income)
  6. Section 956: Investments in U.S. Property
  7. Section 2501: U.S. Gift Taxes on “Cross-Border” Gifts
  8. Foreign Trust & Gift Reporting Under Sections 6048 & 6039F
  9. Section 7701(b): U.S. Individual Income Tax Residency
  10. Permanent Establishment: Article 5 of the OECD Model Income Tax Treaty
Tags: Charts - Flowcharts