Table of Contents
See Chart A to determine which Parts of Form 8854 you must complete.
Chart A. Which Parts To Complete
| IF your expatriation date is: | THEN you must complete the following Parts. | ||||
| I | II | III | IV | V | |
| After June 3, 2004, and before June 17, 2008 | ✓ | ✓ | ✓ | ||
| After June 16, 2008, and before January 1, 2011 * | ✓ | ✓ | |||
| During 2011 | ✓ | ✓ | ✓ | ||
| * Only if you deferred the payment of tax OR have an item of eligible deferred compensation OR have an interest in a nongrantor trust. | |||||
This section is to be completed by all filers.
If you have a P.O. box, enter your box number instead of your street address only if your post office does not deliver mail to the street address.
Enter the information in the following order: street address, city, province or state, and country. Follow the country's practice for entering the postal code. Do not abbreviate the country name.
Enter the country of which you are considered a resident for tax purposes if it is different from the country in which your principal foreign residence is located.
Your expatriation date is the date you relinquish citizenship (in the case of a former citizen) or terminate your long-term residency (in the case of a former U.S. resident). See Date of relinquishment of U.S. citizenship or Date of termination of long-term residency, earlier.
If you are a person who expatriated after June 3, 2004, and before June 17, 2008, and you have not yet notified the Secretary of State or Secretary of Homeland Security in connection with your expatriating act, you must file an amended Form 8854 stating the date on which such notification occurs.
Enter the number of days or parts of days you were physically present in the United States during the year.
List all countries (other than the United States) of which you are a citizen and the date on which you became a citizen.
Check the “No” box if you expatriated after June 3, 2004, and before June 17, 2008, and have not previously filed Form 8854. You must complete Form 8854 for the year in which you expatriated for immigration purposes before you can file Form 8854 for the current year. You can download Form 8854 for any year at www.irs.gov/form 8854.
Check the “Yes” box if you completed Form 8854 for any period after June 3, 2004, and before June 17, 2008. Enter the tax year for which you first filed Form 8854 and go to line 2.
If you were physically present in the United States more than 30 days but not more than 60 days during the tax year, complete lines 2a and 2b. If you answer “No” to either question, you will be taxed as a U.S. citizen or resident and must file Form 1040 for the current tax year. If you answer “Yes” to both questions, you remain subject to section 877 for the tax year.
You must file Part III if you:
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Deferred the payment of tax on any property on your 2008, 2009, or 2010 Form 8854;
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Reported an eligible deferred compensation item on your 2008, 2009, or 2010 Form 8854; or
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Reported an interest in a nongrantor trust on your 2008, 2009, or 2010 Form 8854.
If you deferred the payment of tax in an earlier year, refer to the Form 8854 you filed for that earlier year to complete columns (a), (b), and (c). For 2008, use the information from Part B, line 8; for 2009, use the information from Part IV, line 9; for 2010, use the information from Part IV, line 8.
If you disposed of any property in 2011 on which you deferred the payment of tax on a previous return, also complete column (d). You must report the gain or loss from the property disposed of on the appropriate line (or schedule) of Form 1040NR.
Check the “Yes” box if you received any distributions of eligible deferred compensation items in 2011. Enter the part of the distribution that you would include in gross income if you continued to be subject to tax as a U.S. citizen or resident. Also enter the total amount of tax withheld by the payer(s) of any eligible deferred compensation items.
Unless the exception below applies, check the “Yes” box if you received any direct or indirect distributions of property (including money) from a nongrantor trust in 2011. Enter the part of the distribution that you would include in gross income if you continued to be subject to tax as a U.S. citizen or resident. Also enter the total amount of tax withheld by the payer(s) of any distribution.
This section must be completed by all individuals who expatriated in 2011.
Check the “Yes” box if:
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You expatriated before you were 18½, and
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You have been a resident of the United States for not more than 10 tax years before you expatriated. For the purpose of determining U.S. residency, use the substantial presence test described in chapter 1 of Pub. 519.
Check the “Yes” box if you have complied with your tax obligations for the 5 tax years ending before the date on which you expatriated, including but not limited to, your obligations to file income tax, employment tax, gift tax, and information returns, if applicable, and your obligation to pay all relevant tax liabilities, interest, and penalties. You will be subject to tax under section 877A if you have not complied with these obligations, regardless of whether your average annual income tax liability or net worth exceeds the applicable threshold amounts.
Complete Section B only if you are a covered expatriate (see Covered expatriate, earlier). If you need additional space for the description of property, or if you need additional entry lines, attach a continuation statement.
None of the amounts checked on line 7 are subject to the mark-to-market tax. Do not include them on line 8.
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Any interest in a plan or arrangement described in section 219(g)(5). This includes a qualified pension, profit-sharing (including 401(k)), annuity, SEP, and SIMPLE plan.
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Any interest in a foreign pension plan or similar retirement arrangement or program.
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Any item of deferred compensation. This is any amount of compensation if, under the terms of the plan, contract, or other arrangement providing for such compensation, the following conditions were met.
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You had a legally binding right on your expatriation date to such compensation,
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The compensation has not been actually or constructively received on or before the expatriation date, and
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The compensation is payable on or after the expatriation date.
Examples of items of deferred compensation include: a cash-settled stock appreciation right, a phantom stock arrangement, a cash-settled restricted stock unit, an unfunded and unsecured promise to pay money or other compensation in the future (other than such a promise to transfer property in the future), and an interest in a trust described in section 402(b)(1) or (4) (commonly referred to as a secular trust).
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Any property, or right to property, that you are entitled to receive in connection with the performance of services to the extent not previously taken into account under section 83 or in accordance with section 83. Examples of these items include, but are not limited to, restricted stock, stock-settled stock appreciation rights, and stock-settled restricted stock units.
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An individual retirement plan (except those described in section 408(k) or 408(p)),
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A Coverdell education savings account, or
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A health savings account or an Archer medical savings account.
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You are entitled or permitted, under the terms of the trust instrument or applicable local law, to receive a direct or indirect distribution of trust income or corpus (including, for example, a distribution in discharge of an obligation);
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You have the power to apply trust income or corpus for your own benefit; or
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You could be paid from the trust income or corpus if the trust or the current interests in the trust were terminated.
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“I waive any right to claim any reduction in withholding on any distribution from such trust under any treaty with the United States.”, or
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“I elect under section 877A(f)(4)(B) to be treated as having received the value of my entire interest in the trust (as determined for purposes of section 877A) as of the day before my expatriation date. I attach a copy of my valuation letter ruling issued by the IRS. ”
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Deferred compensation items.
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Specified tax deferred accounts.
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Interests in nongrantor trusts.
Example.
X, a covered expatriate, renounced his citizenship on Date 2. On Date 1, the day before X's renunciation of his citizenship, X owned three assets, which he had owned for more than one year. Asset A is business property and assets B and C are personal property. As of Date 1, Asset A had a fair market value of $2,000,000 and a basis of $200,000, Asset B had a fair market value of $1,000,000 and a basis of $800,000, and Asset C had a fair market value of $500,000 and a basis of $800,000. X must allocate the exclusion amount as follows:
Step 1: Determine the built-in gain or loss of each asset by subtracting the basis from the FMV of the asset on Date 1.
| Basis | FMV | Built-in Gain/Loss | |
| Asset A | 200,000 | 2,000,000 | 1,800,000 |
| Asset B | 800,000 | 1,000,000 | 200,000 |
| Asset C | 800,000 | 500,000 | (300,000) |
Step 2: Allocate the exclusion amount to each of the gain properties by multiplying the exclusion amount ($636,000) by a ratio of the deemed gain attributable to each gain property over the total gain of all the gain properties deemed sold.
| Asset A | |
| 1,800,000 | × 636,000 = 572,400 |
| 2,000,000 | |
| Asset B | |
| 200,000 | × 636,000 = 63,600 |
| 2,000,000 |
Step 3: Figure the final amount of deemed gain on each asset by subtracting the exclusion amount allocated to each asset.
| Asset A: | 1,800,000 − 572,400 = 1,227,600 |
| Asset B: | 200,000 − 63,600 = 136,400 |
Example.
Line 8 lists four assets, each resulting in a deemed gain in column (d). The amount of tax eligible for deferral on Section C, line 14, is $575,000. You must go back to Section B, line 8, column (g), to allocate the deferred tax among the individual properties.
Use lines 12 through 15 to figure the amount of tax you can defer. Before completing lines 12 through 15, you must fill out two hypothetical individual income tax returns using Form 1040. The first return includes all income, including the section 877A(a) gain and loss. The second return includes all income except the section 877A(a) gain and loss. Attach both returns to this Form 8854.
If you are not electing to defer the payment of tax on the gain reported on line 8, column (e), report on the appropriate income tax return schedule or form the gain amount attributable to each particular property as listed in line 8, column (e), and report the loss amount attributable to each particular property as listed in line 8, column (d). If you are electing to defer tax, go to line 12.
This is the amount of tax you elect to defer. If you are deferring tax on all properties, enter the amount from line 14. If you are electing deferral on only certain properties, go to Section B, line 8, column (g), to show how much deferred tax is allocated to each property. Attach a computation.
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A bond that is furnished to, and accepted by, the IRS, that is conditioned on the payment of tax (and interest thereon), and that meets the requirements of section 6325; or
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Another form of security (including letters of credit) that is acceptable to the IRS.
Internal Revenue Service
SBSE Advisory Office
7850 SW 6th Court
Mail Stop 5780
Plantation, FL 33324-3202
Telephone: (954) 423-7344
As a further condition to making the election to defer the payment of tax on a particular asset, you must waive any right under any U.S. tax treaty that would preclude the assessment or collection of the tax.
The financial information in Part V is required under section 6039G.
Note.
If there have been significant changes in your assets and liabilities for the period that began 5 years before your expatriation and ended on the date that you first filed Form 8854, you must attach a statement explaining the changes. Also, if you expatriated after June 3, 2004, and before June 17, 2008, attach a similar statement if you expect significant changes in the 10-year period after expatriation or termination of residency.
List in U.S. dollars the fair market value (column (a)) and the U.S. adjusted basis (column (b)) of your assets and liabilities as of:
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The end of the tax year for which you are filing this form if your expatriation date is before June 17, 2008, or
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Your expatriation date if you expatriated on or after June 17, 2008.
You can use good faith estimates of fair market value and basis. Formal appraisals are not required.
Subtract the amounts in column (b) from the amounts in column (a) and show the gain or (loss) in column (c). Enter negative amounts in parentheses.
If you are a former U.S. LTR, it may benefit you to complete column (d). For more details, see section 877(e)(3)(B) or section 877A(h)(2). Only former U.S. LTRs should complete column (d).
Enter in column (d) the fair market value of each asset on the date you first became a U.S. resident for tax purposes.
Note.
The date you first became a U.S. resident for tax purposes is not always the same as the date you first became a U.S. lawful permanent resident. For details on U.S. residency (including the substantial presence test), see Pub. 519.
List the appropriate amount in each column for all nonmarketable stock and securities issued by foreign corporations that would be controlled foreign corporations if you were still a U.S. citizen or resident. Note that these amounts are already included on line 5. Do not include amounts on this line in the total on line 20.
List the total value of all your partnership interests. If you hold an interest in one or more partnerships, you must attach a statement to Form 8854 that lists each partnership separately. Include the employer identification number (EIN), if any, for each partnership. Describe the assets and liabilities (using the categories on this balance sheet) from your interest in each partnership.
List the total value of all assets held by trusts that you are considered to own for tax purposes. You must attach a statement to Form 8854 that lists each trust separately. Include the EIN (if any) for each trust. Describe the assets and liabilities (using the categories on this balance sheet) from your interest in each trust.
Note.
To determine if you are an owner of a trust, see sections 671 through 679.
List the total value of all assets held by nongrantor trusts in which you are considered to have a beneficial interest. You must attach a statement to Form 8854 that lists each trust separately. Include the EIN (if any) for each trust. Describe the assets and liabilities (using the categories on this balance sheet) from your interest in each trust.
Note.
To determine if you are a beneficiary of a nongrantor trust, you must allocate the property interests of the trust based on all relevant facts and circumstances. To determine the value of your beneficial interest, use the valuation principles under section 2512. See Section III of Notice 97-19 for examples of how the property interests of a nongrantor trust should be allocated to the beneficiaries of the trust.
Intangible property includes any of the following items that have substantial value independent of the services of any individual.
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Patent, invention, formula, process, design, pattern, or know-how.
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Copyright, literary, musical, or artistic composition.
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Trademark, trade name, or brand name.
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Franchise, license, or contract.
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Method, program, system, procedure, campaign, survey, study, forecast, estimate, customer list, or technical data.
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Any similar item.
Attach a statement describing and listing the total value of any other assets you have that are not included on lines 1 through 18.
Combine lines 1 through 5 and 6 through 19, not including any amounts on line 5a. The amounts on line 5a are included in determining the amounts on line 5.
Schedule B is required to satisfy the requirements of section 6039G(b)(5). You must complete Schedule B without regard to whether you have income subject to tax under section 877 or section 877A for the tax year.
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If your expatriation date is before June 17, 2008, provide income information for the tax year for which you are filing Form 8854.
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If your expatriation date is after June 16, 2008, provide income information for the part of the tax year that ends with the day before your expatriation date, but enter zero on lines 5, 6, and 7.
Note.
If you are subject to section 877 for all or a part of the tax year, and you have income subject to tax under section 877 for the tax year, you are liable for tax on that income as provided in section 1 or section 55, if the tax figured under such sections exceeds the tax that would be imposed on you under section 871. In most cases, this means that you must report all income subject to tax under section 877 on Form 1040NR, whether or not it is effectively connected with the conduct of a trade or business in the United States, and you are not permitted to exclude certain types of income, such as portfolio interest or capital gains, which normally would be exempt from tax in the hands of a nonresident alien.
Include all U.S. source gross income that is not effectively connected with the conduct of a U.S. trade or business on lines 1a through 1e.
Lines 3 through 6 require reporting income that, but for the application of section 877(d), would be income from sources outside the United States. If you report income on these lines, you also must report this income as taxable income on Form 1040NR.
If you owned (within the meaning of section 958(a) or (b)) at any time during the 2-year period ending on the date of your expatriation, more than 50% of the vote or value of a foreign corporation, income or gain you receive from the foreign corporation during the tax year will be treated as from sources within the United States, to the extent such income or gain is not more than the earnings and profits from such stock that were earned or accumulated before the date of your expatriation while such ownership requirements were met.
If, during the current tax year, you exchanged any property and (a) the gain would not (but for this paragraph) be recognized on such exchange in whole or in part, (b) income derived from such property was from sources within the United States (or, if no income was so derived, would have been from such sources), and (c) income derived from the property acquired in the exchange would be from sources outside the United States, then the property will be treated as sold for its fair market value on the date of the exchange, in accordance with Section V of Notice 97-19. The removal of appreciated property with an aggregate fair market value in excess of $250,000 from the United States is an exchange of property covered by this provision.
Enter on line 6 the total amount of gain resulting from any such exchanges during the tax year and, if you have elected to enter into a gain recognition agreement with the IRS deferring the gain, attach a copy of the agreement to your Form 1040NR. If you dispose of any property covered by a gain recognition agreement during the tax year, also list the gain realized on this line. See Section V of Notice 97-19 for additional information on exchanges and gain recognition agreements.
If, during the 10-year period beginning on the date of your expatriation, or during the 5-year period before your expatriation, you contributed U.S.-source property to a foreign corporation that would be a controlled foreign corporation had you remained a U.S. citizen or LTR, any income or gain on that property received or accrued by the foreign corporation during the tax year is treated as received or accrued by you. See Section VI of Notice 97-19 for additional information.
If you are subject to section 877 or section 877A and required to file Form 8854 for any tax year, and you fail to file or do not include all the information required by the form or the form includes incorrect information, you will owe a penalty of $10,000 for that year, unless it is shown that such failure is due to reasonable cause and not willful neglect.
Form 8854 is not considered valid unless you sign it. If you have someone else prepare Form 8854, you are still responsible for its correctness.
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