2023

Instructions for Form 8854

Initial and Annual Expatriation Statement

Department of the Treasury

Internal Revenue Service

Section references are to the Internal Revenue Code unless 

otherwise noted.

Future Developments

For the latest information about developments related to 

Form 8854 and its instructions, such as legislation enacted 

after they were published, go to IRS.gov/Form8854.

What's New

Increase in average annual net income tax liability. The 

average annual net income tax liability for the 5 tax years 

ending before your expatriation date, which is used to 

determine whether an individual is a covered expatriate, has 

increased to $190,000. For more information, see Covered 

expatriate, later.

Increase in threshold for net unrealized gain on property. For 2023, if you are a covered expatriate, the net gain 

that you must otherwise include in your income is reduced by 

$821,000. For more information, see Taxation Under Section 

877A, later.

General Instructions

Purpose of Form

Section 877A applies to U.S. citizens who have relinquished 

their citizenship and long-term residents who have ended 

their residency (expatriated) on or after June 17, 2008.

Form 8854 is used by expatriates to certify compliance 

with tax obligations in the 5 years before expatriation and to 

comply with their initial and annual information reporting 

obligations under section 6039G.

Note. Individuals who expatriated for immigration purposes 

after June 3, 2004, and before June 17, 2008, but who have 

not previously filed a Form 8854, continue to be treated as 

U.S. citizens or U.S. lawful permanent residents for U.S. 

income tax purposes until they file a Form 8854. See section 

7701(n), as in effect before June 17, 2008.

Individuals in this category are subject to section 877 once 

they file the Form 8854. These individuals should use the 

2018 Form 8854 and the Instructions for Form 8854 (but 

modify the year on the form by crossing out 2018 and 

entering the year of actual filing) for purposes of filing their 

initial and/or annual expatriation statements pursuant to 

section 877 going forward.

Individuals who expatriated before June 17, 2008, who 

have previously filed a Form 8854, but who still have an 

annual reporting requirement in 2023 under section 877, 

should also use the 2018 Form 8854 but modify the year on 

the form by crossing out 2018 and entering 2023.

Who Must File

You must file your initial Form 8854 (Parts I and II) if you 

relinquished your U.S. citizenship in 2023 or you are a 

long-term resident (LTR), defined below, and terminated your 

residency in 2023.

You must file your annual Form 8854 (Parts I and III) if you 

expatriated before 2023 and you:

1. Deferred the payment of tax,

2. Have an item of eligible deferred compensation, or

3. Are a beneficiary of a nongrantor trust.

Expatriation. Expatriation includes the acts of relinquishing 

U.S. citizenship and terminating long-term residency.

Date of relinquishment of U.S. citizenship. You are 

considered to have relinquished your U.S. citizenship (and 

consequently, have an expatriation date) on the earliest of the 

following dates.

1. The date you renounced your U.S. citizenship before a 

diplomatic or consular officer of the United States (provided 

that the voluntary renouncement was later confirmed by the 

issuance of a certificate of loss of nationality).

2. The date you furnished to the State Department a 

signed statement of your voluntary relinquishment of a U.S. 

nationality confirming the performance of an expatriating act 

(provided that the voluntary relinquishment was later 

confirmed by the issuance of a certificate of loss of 

nationality).

3. The date the State Department issued a certificate of 

loss of nationality.

4. The date a U.S. court canceled your certificate of 

naturalization.

Long-term resident (LTR) defined. You are an LTR if you 

were a lawful permanent resident of the United States in at 

least 8 of the last 15 tax years ending with the year you are 

no longer treated as a lawful permanent resident. In 

determining if you meet the 8-year requirement, don't count 

any year if in that year you were treated as a resident of a 

foreign country under a tax treaty and did not waive treaty 

benefits applicable to residents of that country.

Lawful permanent resident. You are a lawful permanent 

resident of the United States if you have been given the 

privilege, according to U.S. immigration laws, of residing 

permanently in the United States as an immigrant. You 

generally have this status if you have been issued an alien 

registration card, also known as a green card, and your green 

card hasn't been revoked or judicially or administratively 

determined to have been abandoned. However, you are also 

no longer treated as a lawful permanent resident if you (1) 

commenced to be treated as a resident of a foreign country 

under the provisions of a tax treaty, (2) did not waive the 

benefits of such treaty, and (3) notified the IRS of the 

commencement of such treatment. See Regulations section 

301.7701(b)-7 for information on related filing requirements.

Date of termination of long-term residency. If you were 

an LTR, you terminated your lawful permanent residency 

(and consequently, have an expatriation date) on the earliest 

of the following dates.

Aug 10, 2023 Cat. No. 24874E
1. The date you voluntarily abandoned your lawful 

permanent resident status by filing Department of Homeland 

Security Form I-407 with a U.S. consular or immigration 

officer.

2. The date you became subject to a final administrative 

order that you abandoned your lawful permanent resident 

status (or, if such order has been appealed, the date of a final 

judicial order issued in connection with such administrative 

order).

3. The date you became subject to a final administrative 

or judicial order for your removal from the United States 

under the Immigration and Nationality Act.

4. If you were a dual resident of the United States and a 

country with which the United States has an income tax 

treaty, the date on which you commenced to be treated as a 

resident of that country under the treaty, did not waive the 

benefits of the treaty, and gave notice to the IRS of the 

commencement of such treatment. See Regulations section 

301.7701(b)-7 for information on related filing requirements.

Covered expatriate. You are a covered expatriate if you 

expatriated after June 16, 2008, and any of the following 

statements apply.

1. Your average annual net income tax liability for the 5 

tax years ending before the date of expatriation is more than 

$190,000.

2. Your net worth was $2 million or more on the date of 

your expatriation.

3. You fail to certify on Form 8854 that you have complied 

with all federal tax obligations for the 5 tax years preceding 

the date of your expatriation.

Exception for dual-citizens and certain minors. 

Dual-citizens and certain minors (defined next) won't be 

treated as covered expatriates (and therefore won't be 

subject to the expatriation tax) solely because one or both of 

the statements in paragraph (1) or (2) under Covered 

expatriate, earlier, applies. However, these individuals will still 

be treated as covered expatriates unless they file Form 8854 

and certify that they have complied with all federal tax 

obligations for the 5 tax years preceding the date of 

expatriation as required in paragraph (3) (under Covered 

expatriate, earlier).

Certain dual-citizens. You can qualify for the exception 

described above if you meet both of the following 

requirements.

• You became at birth a U.S. citizen and a citizen of another 

country and, as of your expatriation date, you continue to be 

a citizen of, and are taxed as a resident of, that other country.

• You were a resident of the United States for not more than 

10 years during the 15-tax-year period ending with the tax 

year during which you expatriated. For the purpose of 

determining U.S. residency, use the substantial presence test 

described in chapter 1 of Pub. 519.

Certain minors. You can qualify for the exception 

described above if you meet both of the following 

requirements.

• You expatriated before you were 181/2.

• You were 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.

Note. If you have relinquished or intend to relinquish your 

U.S. citizenship, and you wish to come into compliance with 

your U.S. income tax and reporting requirements in order to 

avoid being treated as a covered expatriate under section 

877A, you may qualify for certain relief procedures. See 

IRS.gov/Individuals/International-Taxpayers/ReliefProcedures-for-Certain-Former-Citizens.

Penalties. If you are subject to 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.

Taxation Under Section 877A

If you are a covered expatriate in the year you expatriate, you 

are subject to income tax on the net unrealized gain in your 

property as if the property had been sold for its fair market 

value (FMV) on the day before your expatriation date 

(“mark-to-market tax”). This applies to most types of property 

interests you held on the date of your expatriation. But see 

Exceptions, later.

Gains from deemed sales are taken into account without 

regard to other rules under the Code. Losses from deemed 

sales are taken into account to the extent otherwise allowed 

under the Code. However, section 1091 (relating to the 

disallowance of losses on wash sales of stock and securities) 

doesn't apply. For 2023, the net gain that you must otherwise 

include in your income is reduced (but not below zero) by 

$821,000.

Exceptions. The mark-to-market tax does not apply to the 

following.

1. Eligible deferred compensation items.

2. Ineligible deferred compensation items.

3. Specified tax deferred accounts.

4. Interests in nongrantor trusts.

Instead, item (1) is subject to withholding provided that 

you (i) properly make an irrevocable waiver on your initial 

filing of this form of any right to claim any reduction in 

withholding under an applicable treaty between the United 

States and your country of residence (see Line 1a under Part 

II, Section C, later); and (ii) timely notify the payor on Form 

W-8CE. To timely notify the payor on Form W-8CE, you must 

file the Form W-8CE with the payor on the earlier of:

• The day before the first distribution on or after your 

expatriation date, or

• 30 days after your expatriation date.

In the case of item (2), you are treated as receiving the 

present value of your accrued benefit as of the day before 

your expatriation date and you should include this amount on 

your Form 1040 or 1040-SR for the year that includes your 

expatriation date. In the case of item (3), you are treated as 

receiving a distribution of your entire interest in the account 

on the day before your expatriation date and you should 

include this amount on your Form 1040 or 1040-SR for the 

year that includes your expatriation date. See paragraphs (d), 

(e), and (f) of section 877A.

Item (4) is subject to withholding, and you are treated as 

having waived any right to claim any reduction in withholding 

under an applicable treaty between the United States and 

your country of residence, unless you elect to be treated as 

having received the value of your entire interest in the trust by 

obtaining a ruling from the IRS to that effect. See Section C 

under Part II, later.

-2- Instructions for Form 8854 (2023)
Deferral of the payment of mark-to-market tax. You can 

make an irrevocable election to defer the payment of the 

mark-to-market tax imposed on the deemed sale of property. 

If you make this election, the following rules apply.

1. You make the election on a property-by-property basis.

2. The deferred tax on a particular property is due on the 

return for the tax year in which you dispose of the property.

3. Interest is charged for the period the tax is deferred.

4. The due date for the payment of the deferred tax 

cannot be extended beyond the earlier of the following dates.

a. The due date of the return required for the year of 

death.

b. The time that the security provided for the property 

fails to be adequate. See item (6) below.

5. You make the election in Part II, Section D.

6. You must provide adequate security (such as a bond).

7. You must make an irrevocable waiver of any right 

under any treaty of the United States that would preclude 

assessment or collection of any tax imposed by section 

877A.

When To File

Attach your initial Form 8854 to your income tax return (Form 

1040, 1040-SR, or 1040-NR) for the year that includes your 

expatriation date, and file your return by the due date of your 

tax return (including extensions). Also send a copy of your 

Form 8854, marked “Copy,” to the address under Where To 

File, later. If you are not required to file an income tax return, 

send your Form 8854 to the address under Where To File, 

later, by the date your Form 1040-NR (or Form 1040 or 

1040-SR) would have been due (including extensions) if you 

had been required to file. (See Resident Alien or Nonresident 

Alien in the Instructions for Form 1040-NR.)

File your annual Form 8854 if you expatriated before 2023 

and you:

1. Deferred the payment of tax on any property on a Form 

8854 filed in a previous year,

2. Reported an eligible deferred compensation item on a 

Form 8854 filed in a previous year, or

3. Reported an interest in a nongrantor trust on a Form 

8854 filed in a previous year.

See Part III, later.

For each year that you are required to file a Form 1040-NR 

(or Form 1040 or 1040-SR), attach your annual Form 8854 to 

your Form 1040-NR (or Form 1040 or 1040-SR) and send a 

copy, marked “Copy,” to the address under Where To File, 

later. For each year that you are not required to file Form 

1040-NR (or Form 1040 or 1040-SR), send your Form 8854 

to the address under Where To File, later, by the date your 

Form 1040-NR (or Form 1040 or 1040-SR) would have been 

due (including extensions) if you had been required to file a 

Form 1040-NR (or Form 1040 or 1040-SR).

Where To File

1. Send your original initial or annual Form 8854 to the 

address listed below.

2. If you are required to attach the original Form 8854 to a 

Form 1040-NR, 1040, or 1040-SR, send a copy of your initial 

or annual Form 8854, marked “Copy,” to the address listed 

below.

3. If you elected to defer the payment of any tax due, see 

the instructions under Part II, Section D, Line 5, later, and 

send your tax deferral agreement request to the address 

listed below.

Internal Revenue Service

3651 S IH35

MS 4301AUSC

Austin, TX 78741

Note. If you were a U.S. person for any portion of 2023, you 

may be required to file Financial Crimes Enforcement 

Network (FinCEN) Form 114, Report of Foreign Bank and 

Financial Accounts (FBAR). In addition, you may be required 

to file Form 8938, Statement of Specified Foreign Financial 

Assets. For more information, go to IRS.gov/FBAR.

Specific Instructions

Identifying number. Generally, this number is your U.S. 

social security number. If you were never issued a social 

security number, attach a statement explaining the reason.

Part I—General Information

This section is to be completed by all filers.

Line 1

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.

Line 2

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. Don't abbreviate the 

country name.

Line 3

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.

Line 4

Check the appropriate box to indicate whether you 

expatriated in 2023 and are filing your initial expatriation 

statement, or if you expatriated before 2023 (but after June 

16, 2008) and are filing an annual statement.

Line 5

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.

Line 6

List all countries (including the United States) of which you 

are a citizen and the date, including by birth, on which you 

became a citizen.

Line 7

If you are a former U.S. citizen, check the appropriate box to 

indicate how you became a U.S. citizen.

Instructions for Form 8854 (2023) -3-
Line 8a

If you are or were a U.S. lawful permanent resident, enter the 

date on which you became a U.S. lawful permanent resident. 

This is the date you were issued your green card.

Line 8b

Enter the date you either:

1. Became subject to a final administrative order that you 

abandoned your lawful permanent resident status (or, if such 

order has been appealed, the date of a final judicial order 

issued in connection with such administrative order); or

2. Became subject to a final administrative or judicial 

order for your removal from the United States under the 

Immigration and Nationality Act.

Line 8c

Enter the date you voluntarily abandoned your lawful 

permanent resident status by filing Department of Homeland 

Security Form I-407 with a U.S. consular or immigration 

officer.

Part II—Initial Expatriation Statement 

for Persons Who Expatriated in 2023

Section A—Expatriation Information

This section must be completed by all individuals who 

expatriated in 2023.

Line 1

For each of the 5 tax years ending before the date of your 

expatriation, determine your total tax less any foreign tax 

credit. For 2022, use the amount shown on the 2022 Form 

1040, line 24, less any amount reported on Schedule 3 (Form 

1040), line 1.

Line 2

You can use the Part II, Section B, balance sheet to 

determine your net worth.

Line 3

Check the “Yes” box if you became at birth a U.S. citizen and 

a citizen of another country and, as of your expatriation 

date, you continue to be a citizen of, and are taxed as a 

resident of, that other country.

Line 5

Check the “Yes” box if:

• You expatriated before you were 181/2, and

• 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.

Line 6

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 certified your compliance with these 

obligations, regardless of whether your average 

annual income tax liability or net worth exceeds the 

applicable threshold amounts.

Section B—Balance Sheet

The financial information in this balance sheet is required 

under section 6039G. The balance sheet can be used to 

arrive at your net worth.

For purposes of determining your net worth, you are 

considered to own any interest in property that would be 

taxable as a gift under chapter 12 of subtitle B of the Code 

had you transferred it immediately prior to expatriation, but 

without regard to sections 2503(b) through (g), 2513, 2522, 

2523, and 2524. To determine the value of your interests in 

property, use the valuation principles of section 2512 and the 

regulations thereunder.

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.

Columns (a) and (b)

List in U.S. dollars the FMV (column (a)) and the U.S. 

adjusted basis (column (b)) of your assets and liabilities as of 

your expatriation date.

You can use good faith estimates of FMV and basis. 

Formal appraisals are not required.

Line 5a

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. Don't include 

amounts on this line in the total on line 20.

Line 6

List in U.S. dollars the present value of your U.S. and foreign 

pensions or similar retirement arrangements as of your 

expatriation date.

Line 7

List in U.S. dollars the present value of your deferred 

compensation, including any stock options, as of your 

expatriation date. The present value should include all 

deferred compensation, regardless of where you performed 

services.

Line 8

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), 

CAUTION

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-4- Instructions for Form 8854 (2023)
if any, for each partnership. Describe the assets and liabilities 

(using the categories on this balance sheet) from your 

interest in each partnership.

Line 9

For purposes of determining your net worth, you are 

considered to own assets held in trusts that would be subject 

to U.S. gift tax if you had transferred your interests in the 

trusts by gift immediately before your expatriation date, but 

without regard to sections 2503(b) through (g), 2513, 2522, 

2523, and 2524. List the total FMV and basis of such 

property on line 9. Attach a statement to Form 8854 

describing each asset. Include the EIN (if any) for the trust in 

which the asset is held.

Line 10

List the total value of all of your beneficial interests in trusts to 

the extent not included on line 9. 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 of which you have a beneficial interest.

Note. To determine the value of your beneficial interest, use 

the two-step process described in section III of Notice 97-19 

which is on page 40 of Internal Revenue Bulletin 1997-10 at 

IRS.gov/pub/irs-irbs/irb97-10.pdf.

Lines 11 and 12

Intangible property includes any of the following items that 

have substantial value independent of the services of any 

individual.

• Patent, invention, formula, process, design, pattern, or 

know-how.

• Copyright, literary, musical, or artistic composition.

• Trademark, trade name, or brand name.

• Franchise, license, or contract.

• Method, program, system, procedure, campaign, survey, 

study, forecast, estimate, customer list, or technical data.

• Any similar item.

Line 19

Attach a statement describing and listing the total value of 

any other assets you have that aren't included on lines 1 

through 18.

Line 20

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.

Line 23

Attach a statement describing and listing the total value of 

any other liabilities you have that aren't included on lines 21 

and 22.

Section C—Property Owned on Date of 

Expatriation

Complete Section C 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 statement.

Line 1

None of the amounts checked on line 1 are subject to the 

mark-to-market tax. Don't include them on line 2. Instead, 

you must attach a statement to the form that separately 

identifies each amount checked on line 1 as of the day before 

your expatriation date.

Some of these amounts may otherwise be taxable or 

subject to income tax withholding at source. You 

must provide Form W-8CE to the payor of the 

relevant items. See paragraphs (d), (e), and (f) of section 

877A for more information.

Line 1a. Generally, a deferred compensation item is one of 

the following.

1. 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.

2. Any interest in a foreign pension plan or similar 

retirement arrangement or program.

3. Any item of deferred compensation, whether or not 

substantially vested. 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.

a. You had a legally binding right on your expatriation 

date to such compensation.

b. The compensation has not been actually or 

constructively received on or before your expatriation date.

c. The compensation is payable on or after your 

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”).

4. Any property, or right to property, that you are entitled 

to receive in connection with the performance of services 

(whether or not such property or right to property is 

substantially vested) 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.

Note. A deferred compensation item does not include the 

portion of an item that is attributable to services performed 

outside the United States while you were not a citizen or 

resident of the United States. For more information, see 

section 5 of Notice 2009-85, 2009-45 I.R.B. 598, available at 

IRS.gov/irb/2009-45_IRB#NOT-2009-85.

TIP

Instructions for Form 8854 (2023) -5-
Eligible deferred compensation item means any deferred 

compensation item with respect to which:

• The payor is either a U.S. person or a non-U.S. person who 

elects to be treated as a U.S. person for purposes of section 

877A(d)(1),

• The covered expatriate notifies the payor of their status as 

a covered expatriate on Form W-8CE, and

• The covered expatriate irrevocably waives any right to 

claim any withholding reduction on such item under any 

treaty with the United States on Form 8854.

The Secretary may provide separate guidance providing a 

procedure for a payor who is a non-U.S. person and wishes 

to elect to be treated as a U.S. person for purposes of section 

877A(d)(1).

You must file Form 8854 annually to certify that no 

distributions have been received from your eligible 

deferred compensation item(s) or to report the 

distributions you received.

Note. If you have one or more eligible deferred 

compensation items, you must attach a statement to the form 

that separately identifies each eligible deferred 

compensation item and includes the following language for 

each item: “I irrevocably waive any right to claim any 

reduction in withholding for this eligible deferred 

compensation item under any treaty with the United States.”

Line 1b. Ineligible deferred compensation item means any 

deferred compensation item that is not an eligible deferred 

compensation item. The amount of this deferred 

compensation item (the present value of the accrued benefit) 

must be included on your Form 1040 or 1040-SR, or other 

schedule, for the portion of your tax year that includes your 

expatriation date. For more information, see section 5D of 

Notice 2009-85, 2009-45 I.R.B. 598, available at IRS.gov/irb/

2009-45_IRB#NOT-2009-85.

Note. If you have one or more ineligible deferred 

compensation items, you must attach a statement to the form 

that separately identifies each ineligible deferred 

compensation item and provides the present value of such 

ineligible deferred compensation item as of the day before 

your expatriation date.

Line 1c. A specified tax deferred account includes:

1. An individual retirement plan (except those described 

in section 408(k) or 408(p)),

2. A Coverdell education savings account, or

3. A health savings account or an Archer medical savings 

account.

The amount of your entire interest in your specified tax 

deferred account on the day before your expatriation date 

must be included on your Form 1040 or 1040-SR, or other 

schedule, for the portion of your tax year that includes your 

expatriation date. For more information, see section 6 of 

Notice 2009-85, 2009-45 I.R.B. 598, available at IRS.gov/irb/

2009-45_IRB#NOT-2009-85.

Note. If you have one or more specified tax deferred 

accounts, you must attach a statement to the form that 

separately identifies each specified tax deferred account and 

provides the entire account balance of each specified tax 

deferred account on the day before your expatriation date.

Line 1d. A nongrantor trust is the part of any trust, whether 

domestic or foreign, of which you were not considered the 

CAUTION

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owner under sections 671 through 679 on the day before 

your expatriation date. You are considered a beneficiary of 

such trust if:

1. 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);

2. You have the power to apply trust income or corpus for 

your own benefit; or

3. You could be paid from the trust income or corpus if 

the trust or the current interests in the trust were terminated.

Unless you elect to be treated as having received the 

value of your interest in the trust, as determined for purposes 

of section 877A, as of the day before your expatriation date, 

you cannot claim a reduction in withholding on any 

distribution from the trust under any treaty with the United 

States. Before you can make the election, you must get a 

letter ruling from the IRS as to the value, if ascertainable, of 

your interest in the trust as of the day before your expatriation 

date by following the procedures set forth in Rev. Proc. 

2020-1, 2020-1 I.R.B. 1, available at IRS.gov/irb/

2020-01_IRB#RP-2020-01. You must make this election by 

checking the box under line 1d of this form and attaching a 

copy of the letter ruling both to this form and to your timely 

filed tax return (including extensions) for the 2023 tax year. 

Until you obtain the valuation letter ruling and provide a copy 

of such letter ruling to the trustee of the nongrantor trust 

together with certification, under penalties of perjury, that you 

have paid all tax due as a result of your election, any taxable 

distributions that you receive from the trust will be subject to 

30% withholding.

If you are a beneficiary of a nongrantor trust, you 

must file Form 8854 annually to certify that no 

distributions have been received or to report the 

distributions you received.

Note. If you are a beneficiary of one or more nongrantor 

trusts, you must attach a statement to the form that 

separately identifies each trust and includes one of the 

following statements for each trust.

1. “I waive any right to claim any reduction in withholding 

on any distribution from such trust under any treaty with the 

United States.”

2. “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.”

Line 2

Column (a). An interest in property includes money or other 

property, regardless of whether it produces any income or 

gain. In addition, an interest in the right to use property will be 

treated as an interest in such property. However, do not list 

the following.

1. Deferred compensation items.

2. Specified tax deferred accounts.

3. Interests in nongrantor trusts.

You are considered to own any interest in property that 

would be included in your gross estate for federal estate tax 

purposes under chapter 11 of subtitle B of the Code if you 

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-6- Instructions for Form 8854 (2023)
died on the day before your expatriation date as a citizen or 

resident of the United States. Whether property would be 

included in your gross estate will be determined without 

regard to sections 2010 through 2016. For this purpose, you 

are considered to own your beneficial interest(s) in each trust 

(or part of a trust), other than a nongrantor trust subject to 

section 877A(f), that would not be included in your gross 

estate as described in the preceding sentences. Your 

beneficial interest(s) in such a trust shall be determined 

under the special rules set forth in section III of Notice 97-19, 

which is on page 40 of Internal Revenue Bulletin 1997-10 at 

IRS.gov/pub/irs-irbs/irb97-10.pdf.

Column (b). Use the FMV on the day before your 

expatriation date. FMV is the price at which the property 

would change hands between a buyer and a seller when both 

have reasonable knowledge of all the necessary facts and 

neither has to buy or sell. If parties with adverse interests 

place a value on property in an arm's-length transaction, that 

is strong evidence of the FMV.

Column (c). Generally, the cost or other basis in this column 

cannot be less than the FMV of the property on the date you 

first became a U.S. resident. However, if you are a naturalized 

citizen or an LTR at the time you expatriated, you can make 

an irrevocable election under section 877A(h)(2) to 

determine basis without regard to this restriction. Print “(h)

(2)” after any entry for which you make this election.

Column (e). Before you complete column (e), you must 

allocate the exclusion amount to the gain properties on a 

separate schedule. Attach a copy of the separate schedule to 

this form. To allocate the exclusion amount, determine the 

gain of each gain property listed in column (a) and enter that 

gain in column (d). If the total gain of all the gain properties 

exceeds the exclusion amount ($821,000 for 2023), then 

allocate the entire exclusion amount to the gain properties by 

multiplying the exclusion amount by the ratio of the gain 

determined for each gain property in column (d) over the total 

gain of all gain properties listed in column (d). After you have 

allocated the exclusion amount to the gain properties, 

subtract the exclusion amount allocated to each gain 

property from the gain reported for that property in column 

(d), and enter the resulting amount of gain in column (e). If 

the total gain of the gain properties in column (d) is less than 

the exclusion amount (but greater than -0-), then you must 

use the total gain amount as the exclusion amount, and you 

must allocate the exclusion amount, as adjusted, to the gain 

properties under the method described above. The exclusion 

amount allocated to each gain property cannot exceed the 

amount of that gain property's built-in gain.

See Notice 2009-85, section 3B, for more information.

Example. Xavier, a covered expatriate, renounced his 

citizenship on Date 2. On Date 1, the day before Xavier's 

renunciation of his citizenship, he owned three assets, which 

he had owned for more than 1 year. Asset A is business 

property and Assets B and C are personal property. As of 

Date 1, Asset A had an FMV of $2,000,000 and a basis of 

$200,000; Asset B had an FMV of $1,000,000 and a basis of 

$800,000; and Asset C had an FMV of $500,000 and a basis 

of $800,000. Xavier 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 ($821,000) 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

 × 821,000 = 738,900

2,000,000

Asset B

 200,000

 × 821,000 = 82,100 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 − 738,900 = 1,061,100

Asset B: 200,000 − 82,100 = 117,900

Column (f). Complete this column in order to list the 

schedule or form on which you reported the deemed sale of 

each property listed in column (a) (for example, Form 4797 or 

Form 8949).

Column (g). Complete this column only for those properties 

for which you are electing to defer the payment of tax. First, 

complete Section D to line 4. On a separate attachment, 

allocate the amount of tax eligible for deferral among all gain 

properties listed on line 2. The tax attributable to a particular 

property is determined by multiplying the amount on 

Section D, line 4, by the ratio of the gain for that property 

entered in line 2, column (e), over the total amount of gain of 

all gain properties in line 4, column (e). In line 2, column (g), 

enter the tax attributable to each property for which you are 

electing to defer tax. Then, enter the total deferred tax for 

those properties from line 4, column (g), on Section D, line 5.

Example. Line 2 lists four assets, each resulting in a 

deemed gain in column (d). The amount of tax eligible for 

deferral on Section D, line 4, is $575,000. You must go back 

to line 2, column (g), to allocate the deferred tax among the 

individual properties.

You must attach a computation to show how you 

figured the tax attributable to each property.

See Section D, later, and Notice 2009-85, section 3E, for 

more information on deferring the payment of tax.

Note. The address listed in section 3E of Notice 2009-85 for 

mailing your tax deferral agreement is no longer valid. See 

Procedure for requesting a deferral of the payment of tax, 

later, for the correct address.

Reporting gain or loss. You must report and recognize the 

gain (or loss) of each property reported in Section C, line 2, 

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Instructions for Form 8854 (2023) -7-
column (a), on the relevant form or schedule of your Form 

1040 or 1040-SR for the part of the year that includes the day 

before your expatriation date. The return to which you attach 

your form or schedule will depend on your status at the end of 

the year. See chapter 1 of Pub. 519 to determine which form 

you should file. The gain from column (e) or loss from column 

(d) attributable to each property is reported in the same 

manner as if the property had actually been sold. For 

example, gain recognized from the deemed sale of a rental 

property that has been depreciated is reported on Form 4797 

as if it had been sold. Gain recognized from the deemed sale 

of personal property (such as stock or a personal residence) 

is reported on Form 8949 as if it had been sold. Capital gain 

retains its character as capital gain; ordinary gain retains its 

character as ordinary income.

Section D—Deferral of Tax

If you expatriated in 2023, and you chose to enter into a tax 

deferral agreement with the IRS with respect to assets 

subject to the mark-to-market rules of section 877A, use lines 

2 through 5 of Section D to figure the amount of tax you can 

defer. Before completing lines 2 through 5 of Section D, you 

must fill out two hypothetical individual income tax returns 

using Form 1040 or 1040-SR. 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 hypothetical returns to this Form 

8854.

Line 1

If you aren't electing to defer the payment of tax on the gain 

reported in Section C, line 2, column (e), report on the 

appropriate income tax return schedule or form the gain 

amount attributable to each particular property as listed in 

Section C, line 2, column (e), and report the loss amount 

attributable to each particular property as listed in Section C, 

line 2, column (d).

If you are electing to defer tax, go to line 2.

Line 2

Enter on line 2 the amount of tax on line 24 of the first return, 

which includes all income, including the section 877A(a) gain 

and loss.

Line 3

Enter on line 3 the amount of tax on line 24 of the second 

return, which includes all income except the section 877A(a) 

gain and loss.

Line 5

This is the amount of tax you elect to defer. If you are 

deferring tax on all properties, enter the amount from line 4. If 

you are electing deferral on only certain properties, go to 

Section C, line 2, column (g), to show how much deferred tax 

is allocated to each property. Attach a computation.

Procedure for requesting a deferral of the payment of 

tax. In order to defer any part of the mark-to-market tax, you 

must enter into a tax deferral agreement with the IRS and 

provide adequate security. Notice 2009-85 contains a sample 

agreement (Appendix A). Adequate security can be either:

1. 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

2. Another form of security (including letters of credit) that 

is acceptable to the IRS.

You must contact the following office in order to make the 

appropriate arrangements for providing security.

Internal Revenue Service

SBSE Advisory Office

7850 SW 6th Court

Mail Stop 5780

Plantation, FL 33324-3202

Telephone: 954-991-4455

You must send your original tax deferral agreement 

request, marked “Original,” with your Form 8854 for the year 

that includes your expatriation date to:

Internal Revenue Service

3651 S IH35

MS 4301AUSC

Austin, TX 78741

If you are required to file a Form 1040, 1040-SR, or 

1040-NR for the year that includes your expatriation date, 

also attach a copy of the tax deferral agreement request, 

marked “Copy,” to the Form 8854 that you include with your 

tax return.

Note. The address listed in section 3E of Notice 2009-85 is 

no longer valid.

If the IRS deems your collateral sufficient, and agrees to 

enter into a tax deferral agreement, you can pay any tax 

deferred, together with interest, at any time. However, the 

time for the payment of tax attributable to a particular deferral 

asset can be extended only until (a) the year the asset is 

ultimately disposed of, or (b) the year of death.

You must file Form 8854 annually for years up to and 

including the year in which the full amount of deferred 

tax and interest is paid.

Waiver of treaty benefits. 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.

Satisfying your deferred tax liability. If you entered into 

an agreement for the deferral of tax with the IRS Advisory 

Office and dispose of one or more assets for which you 

elected to defer tax, you must contact that office to make 

arrangements to satisfy your tax liability. The address for the 

Advisory Office is shown above.

Part III—Annual Expatriation 

Statement for Persons Who 

Expatriated Before 2023

You must file Part III if you:

1. Deferred the payment of tax on any property on a Form 

8854 filed in a previous year,

2. Reported an eligible deferred compensation item on a 

Form 8854 filed in a previous year, or

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-8- Instructions for Form 8854 (2023)
3. Reported an interest in a nongrantor trust on a Form 

8854 filed in a previous year.

Line 1

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). If you expatriated in 2019 or later, 

use the information from Part II, Section C, line 2. If you 

expatriated in 2018 or earlier, use the information from Part 

III, line 1, of the earlier year's Form 8854.

If you disposed of any property in 2023 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 your income tax return.

You must pay the deferred tax, plus interest, on any 

property you disposed of, no later than the due date 

(without extensions) of your 2023 income tax return. 

See Satisfying your deferred tax liability, earlier, for 

information on arranging payment.

See Section D under Part II, earlier, and section 3E of 

Notice 2009-85 for more information on deferring the tax.

Note. The address listed in section 3E of Notice 2009-85 for 

mailing your tax deferral agreement is no longer valid. See 

Procedure for requesting a deferral of the payment of tax 

under Section D, earlier, for the correct address.

Line 2

Check the “Yes” box if you received any distributions of 

eligible deferred compensation items in 2023. 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 

payor(s) of any eligible deferred compensation items.

Don't enter the part of any payment that is 

attributable to services performed outside the United 

States before or after your expatriation date while you 

weren't a citizen or resident of the United States.

Line 3

Unless the exception at the end of this section applies, check 

the “Yes” box if you received any direct or indirect 

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distributions of property (including money) from a nongrantor 

trust in 2023. 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 payor(s) of any distribution.

Don't include any distribution from a trust if your 

interest in the trust was treated in an earlier year as a 

deferred compensation item or part of a specified tax 

deferred account.

Exception. Don't check the “Yes” box if you elected on a 

previously filed Form 8854 to be treated as having received 

the value of your entire interest in the trust as of the day 

before your expatriation date.

Signature

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.

Paid preparers. Generally, anyone you pay to prepare Form 

8854 must sign it and include a preparer tax identification 

number (PTIN) in the space provided. The preparer must 

give you a copy for your records. Someone who prepares 

Form 8854 but does not charge you a fee should not sign it.

Paperwork Reduction Act Notice. We ask for the 

information on this form to carry out the Internal Revenue 

laws of the United States. You are required to give us the 

information. We need it to ensure that you are complying with 

these laws and to allow us to figure and collect the right 

amount of tax.

You are not required to provide the information requested 

on a form that is subject to the Paperwork Reduction Act 

unless the form displays a valid OMB control number. Books 

or records relating to a form or its instructions must be 

retained as long as their contents may become material in the 

administration of any Internal Revenue law. Generally, tax 

returns and return information are confidential, as required by 

section 6103.

The average time and expenses required to complete and 

file this form will vary depending on individual circumstances. 

For the estimated averages, see the instructions for your 

income tax return.

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Instructions for Form 8854 (2023) -9-