Must one pay U.S. exit tax on foreign assets?
Yes - the exit tax generally applies to a covered expatriateu2019s worldwide assets, including foreign assets (more technically, it applies to any interest in property that would have been included in the expatriate's gross estate if he had died on the day prior to the expatriation date). See the previous submission above by Lionel Iruk for the definition of a covered expatriate.Two additional rules to keep in mind that may work in your favor:Gain is recognized only to the extent that the deemed gain exceeds in aggregate $600,000, as indexed for inflation. For 2022 and 2022. the indexed amounts are $690,000, and $693,000, respectively. There are special rules for allocating the exemption amount to oneu2019s individual assets.Given the fiction behind the deemed property sale, the IRS is gracious enough to allow the tax bill to be deferred until the underlying property is sold. However, deferring the tax payment will result in the imposition of interest as the need to post a u201csecurityu201d with the IRS as well as the waiver of any rights under an international tax treaty with respect to the deemed income.Itu2019s also important to note that if your company is a controlled foreign corporation (u201cCFCu201d) for U.S. tax purposes (which it should be, assuming that you wholly own your company), then there may be certain additional implications.For more information, you can visit the IRS webpage dedicated to the Exit Tax: https://www.irs.gov/individuals/...For more helpful expat tax information, feel free to also visit our website: www.expattaxprofessionals.com