Use this button to switch between dark and light mode.

Don’t Leave Me This Way. The Ramifications of Permanently Leaving the U.S. Tax System

October 24, 2023 (3 min read)

The exit tax implications for certain covered expatriates in choosing to permanently leave the U.S.’s worldwide taxation system are economically unpleasant. The IRC applies an exit tax to the net unrealized gains on the covered expatriate’s worldwide assets (fair market value of the assets determined on the day prior to expatriation). I.R.C. § 877A. The rules do not require a formal sale; however, the rules deem a sale of worldwide assets at fair market value to occur, with net gain in excess of an applicable exclusion amount ($821,000 for 2023) exempt from the exit tax.  

Read now »

Related Content

  • The ABCs of Expatriation in These Chaotic Times
    Learn more about the issues of expatriation. In the first three quarters of 2020, 6,047 individuals expatriated the United States permanently. Politics? Climate change? The reasons are many including the U.S.’s taxation on worldwide income.
  • Relocating Abroad? Don’t Forget the Tax Issues Video
    Watch this video by treatise author Rufus Rhoades on the tax ramifications of relocating abroad on a temporary basis. The general foreign income exclusion set forth in I.R.C. § 911(a) is indexed to $120,000 for 2023. A foreign housing exclusion may apply, and foreign tax credits also may reduce the U.S. tax burden to the temporary expatriate. 

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account.    


Experience results today with practical guidance, legal research, and data-driven insights—all in one place.

Experience Lexis+