Nov 1, 2009 12:00 PM

This uncertainty for non-resident aliens regarding estate taxes increases the cost of their investing in the United States

By Dina Kapur Sanna

There are various theories proposed for determining situs of partnership interests for U.S. federal estate tax purposes when those interests are held by a non-resident alien (NRA)¹ and the partnership is a domestic (U.S.) partnership or holds U.S.-situs assets or conducts business in the United States.² When no applicable bilateral estate tax treaty speaks to the issue,³ there's a good deal of uncertainty about situs due to a lack of guidance in the Internal Revenue Code and Treasury regulations. The Internal Revenue Service's position, in an old revenue ruling, is that a partnership interest is a U.S.-situs asset if the partnership is engaged in business in the United States.⁴ But the ruling is based on scant reasoning and the IRS has refused to provide more meaningful guidance.⁵

Congress or the Treasury department should provide greater certainty in this area so NRAs are encouraged to make investments in the United States through the partnership vehicle.

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
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Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

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2011 Trust Glossary

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50 years ago, in May 1962, we featured articles such as: "Future of Canadian Trusteeship" by Arthur H. Mingay", "Training Trust Employees" by Ian M. Marr, "What is a Trust Officer?" by Eric J. Brown, and "Selling Services" by Donald I. Webb.

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