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First just to give you a brief of my situation, I am neither

US citizen nor green card...
First just to give you a brief of my situation, I am neither US citizen nor green card holder. I came to USA in 2008 to work using H1B visa. In 2010, I started to apply for green card (EB3) and my I-140 was approved in 2010. Then I have been waiting for my priority date to become current. In 2012, my company sent me to another country on a 1.5-year assignment but still keeps me on US payroll and keeps my H1B, and I am supposed to come back to the old position in the US in 2014. Because I am outside USA in 2013 only except some short business trips to USA, which is less than 30 days, so I expect to fail the Federal "substantial presence test" in 2013 thus I plan to file my 2013 tax return as a non-resident alien. But I started to apply for US green card back in 2010 and have been waiting in the queue to file the paperwork for the next step (as you know, there is a long green card queue for Chinese people). And because I was physically working in USA from 2009 to 2012, so I always filed as tax resident in these years' tax return.

Now I am thinking about transferring some of my stocks of some public companies (already post tax in my US brokerage account) to my parents as gifts to them (they are not US resident and even have never been to US before), based on my current situation this year, 

- Am I considered to be domiciled in the US for gift tax purposes or not ?

- If I am subject to gift tax, I can still use the lifetime estate basic exclusion amount ($5,120,000) to do tax-free gifting as long as it is below this limit, right ? 

- If I am NOT subject to gift tax, my understanding is that the gifting should be tax-free, and if I become domiciled in the US to be subject to gift tax in the future, I still have the full lifetime estate basic exclusion amount ($5,120,000) by then, right ?

- Because such gifting has a standard way to evaluate the value (the fair market price on the day of transfer which my broker can clearly write it down in my account statement), my guess is that, I do not really need attorney to be involved in the process and I only need to fill out some forms to submit to IRS by myself, right?

- Or if I am NOT subject to gift tax this year as I am considered to be not domicile in the US, I do not even need to submit anything to IRS ? 

- And any other tax implications/consequences if I am NOT subject to gift tax this year?
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Answered in 2 minutes by:
9/20/2013
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,876
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Lane :

Hi

Customer:

feel free to ask me questions for clarification.

Lane :

Keep in mind that the lifetime gift/estate exclusion becomes most important (if not only important) at the end of your life ... This is when it's measured (meaning, the lifetime exclusion can ONLY really be maningful at one of two points - the point in time where you hit that $5,120,000 and/or the time where you die and the amount you gave during life is compared to your estate to see if some of THAT -that FINAL gift - becomae taxable)

Lane :

THe gift tax form, IRS form 709 is used to track those gifts during your life

Customer:

But as I am tax non-resident alien this year, am I also subject to this lifetime exclusion?

Lane :

I would complete the form (you don't need an attorney for that) just to be sure that, (regardless of whether your are considered domiciled today) the time when it becomes important (iIF you are at THAT point domiciled, a resident) here, you will have accurate numbers

Lane :

THat only becomes important if you die this year

Customer:

Do I still need to file IRS form 709 even when I am a tax non-resident alien ?

Lane :

THey won't go back and say... you gave that gift when you were a non-resident ... so it's not part of the lifetime total

Lane :

yes

Customer:

I just would like to double check that, filing a IRS form 709 won't affect my non-resident alien status

Lane :

It will no ... let me get you someing on that

Lane :

will not

Lane :

juuust a sec

Customer:

Cool. Thanks! So IRS form 709 is the only paperwork I need to do for this gifting action, right?

Lane :

That's right .. and it will eb viewed as your being compliant (and may become VERY important later)

Lane :

Are the gifts more than 14,000 per person?

Customer:

yes, it is much more than 14,000

Lane :

then you'll be really pre-empting future headaches by filing it now

Lane :

See this: The Internal Revenue Service and the courts have generally taken the position that cash gifts (for example, in the form of actual bills and coins), constitute tangible personal property. As a result, cash gifts made by a nonresident alien in the U.S. are subject to gift tax.

Customer:

Got it. And do I have to file the form right after the gifting? Do I also need to include this information somewhere in my 2013 tax return next year?

Lane :

NO, totally different system Gift and estate tax system is a transfer tax system, not an income tax system .. from an income tax standpoint, gifts are not even included in income

Lane :

Prior rulings by the Service on the issue of whether a cash transfer, in a form other than the physical exchange of bills and coins, have not been entirely consistent. In addition, a private letter ruling binds only the IRS and the requesting taxpayer. Absent clear guidance, the safest approach is to presume that cash is tangible personal property for purposes of the gift tax rules.

Customer:

I see. So I will just file IRS form 709 after I finish the gifting, which is the only thing I will do.

Lane :

That is correct

Customer:

Sounds good. Thanks a lot for the help!

Lane :

Just found this for the instructions for 709:

Lane :

Nonresidents not citizens of the United
States are subject to gift and GST taxes
for gifts of tangible property situated in the
United States. A person is considered a
nonresident not a citizen of the United
States if he or she, at the time the gift is
made, was domiciled in a United States
possession and acquired citizenship
solely by reason of birth or residence in
the possession

Lane :

Form 709

Customer:

Also, for the evidence of the gifting, I also need to keep the receipt/record of the stock transfer from my brokerage account, right?

Lane :

Yes, would be a best practice - although they are required by to keep it for you and IRS as well

Customer:

And I also plan to send my car to my friend as a gift. In this case, I also need to keep the title transfer forms/paperwork as well, right?

Lane :

Absolutely - no real backup there, and more clearlyt tangible personal property

Customer:

for car transfer as a gift, do I need to have a lawyer or some evaluator to verify the value of the car?

Lane :

NO I would think that Edmunds or KBB would be a better value assessment than an attorney

Customer:

Or I only need to write the number on the title transfer form by myself, without anyone's endorsement or evaluation?

Lane :

Fair market calue is the best indicator, and writing the amount that is consodered reasonable is all that matters

Lane :

"value"

Customer:

So I can just refer to KBB or Edmunds and do a discount based on my car situation, and write it down by myself for the record, right?

Lane :

right

Customer:

got it. that sounds good. thanks a lot for the information:)

Lane :

:)

Lane :

... welcome

Lane :

The links here, byt the way (forms, etc) will stay active... feel free to bookmark and come back for future reference

Lane :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

Customer:

Got it. I will rate it for you now. And I will come back later if I have follow-up small questions on the same question here.

Lane :

Can I help you with anything else today?

Lane :

Sound good

Customer:

thank you!

Lane :

I'll be here ... and thanks

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,876
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Tax Specialists are ready to help you
Ask your own question now

Thanks Bob,



If you'd like to work with ME again just say "For Lane only," at the beginning of your next question.

Thanks again,
Lane

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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,876
12,876 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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