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‘‘(2) EXCEPTIONS FOR TRANSFERS OTHERWISE 
SUBJECT TO ESTATE OR GIFT TAX.—Such term shall 
not include— 
‘‘(A) any property shown on a timely filed 
return of tax imposed by chapter 12 which is a 
taxable gift by the covered expatriate, and 
‘‘(B) any property included in the gross es-
tate of the covered expatriate for purposes of 
chapter 11 and shown on a timely filed return 
of tax imposed by chapter 11 of the estate of the 
covered expatriate. 
‘‘(3) EXCEPTIONS FOR TRANSFERS TO SPOUSE 
OR CHARITY.—Such term shall not include any prop-
erty with respect to which a deduction would be al-
lowed under section 2055, 2056, 2522, or 2523, 
whichever is appropriate, if the decedent or donor 
were a United States person. 
‘‘(4) TRANSFERS IN TRUST.— 
‘‘(A) DOMESTIC TRUSTS.—In the case of a 
covered gift or bequest made to a domestic 
trust— 
‘‘(i) subsection (a) shall apply in the 
same manner as if such trust were a United 
States citizen, and
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‘‘(ii) the tax imposed by subsection (a) 
on such gift or bequest shall be paid by such 
trust. 
‘‘(B) FOREIGN TRUSTS.— 
‘‘(i) IN GENERAL.—In the case of a 
covered gift or bequest made to a foreign 
trust, subsection (a) shall apply to any dis-
tribution attributable to such gift or bequest 
from such trust (whether from income or 
corpus) to a United States citizen or resi-
dent in the same manner as if such dis-
tribution were a covered gift or bequest. 
‘‘(ii) DEDUCTION FOR TAX PAID BY RE-
CIPIENT.—There shall be allowed as a de-
duction under section 164 the amount of tax 
imposed by this section which is paid or ac-
crued by a United States citizen or resident 
by reason of a distribution from a foreign 
trust, but only to the extent such tax is im-
posed on the portion of such distribution 
which is included in the gross income of 
such citizen or resident. 
‘‘(iii) ELECTION TO BE TREATED AS 
DOMESTIC TRUST.—Solely for purposes of 
this section, a foreign trust may elect to be
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treated as a domestic trust. Such an election 
may be revoked with the consent of the Sec-
retary. 
‘‘(f) COVERED EXPATRIATE.—For purposes of this sec-
tion, the term ‘covered expatriate’ has the meaning given 
to such term by section 877A(g)(1).’’. 
(2) CLERICAL AMENDMENT.—The table of chap-
ters for subtitle B is amended by inserting after the 
item relating to chapter 14 the following new item: 
‘‘CHAPTER 15. GIFTS AND BEQUESTS FROM EXPATRIATES.’’. 
(c) DEFINITION OF TERMINATION OF UNITED STATES 
CITIZENSHIP.— 
(1) IN GENERAL.—Section 7701(a) is amended 
by adding at the end the following new paragraph: 
‘‘(50) TERMINATION OF UNITED STATES CITIZEN-
SHIP.— 
‘‘(A) IN GENERAL.—An individual shall not 
cease to be treated as a United States citizen be-
fore the date on which the individual’s citizen-
ship is treated as relinquished under section 
877A(g)(4). 
‘‘(B) DUAL
CITIZENS.—Under regulations 
prescribed by the Secretary, subparagraph (A) 
shall not apply to an individual who became at 
birth a citizen of the United States and a citizen 
of another country.’’.
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(2) CONFORMING AMENDMENTS.— 
(A) Paragraph (1) of section 877(e) is 
amended to read as follows: 
‘‘(1) IN GENERAL.—Any long-term resident of 
the United States who ceases to be a lawful perma-
nent resident of the United States (within the mean-
ing of section 7701(b)(6)) shall be treated for purposes 
of this section and sections 2107, 2501, and 6039G in 
the same manner as if such resident were a citizen of 
the United States who lost United States citizenship 
on the date of such cessation or commencement.’’. 
(B) Paragraph (6) of section 7701(b) is 
amended by adding at the end the following flush 
sentence: 
‘‘An individual shall cease to be treated as a lawful 
permanent resident of the United States if such indi-
vidual commences to be treated as a resident of a for-
eign country under the provisions of a tax treaty be-
tween the United States and the foreign country, does 
not waive the benefits of such treaty applicable to 
residents of the foreign country, and notifies the Sec-
retary of the commencement of such treatment.’’. 
(C) Section 7701 is amended by striking 
subsection (n) and by redesignating subsections
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(o) and (p) as subsections (n) and (o), respec-
tively. 
(d) INFORMATION
RETURNS.—Section 6039G is 
amended— 
(1) by inserting ‘‘or 877A’’ after ‘‘section 877(b)’’ 
in subsection (a), and 
(2) by inserting ‘‘or 877A’’ after ‘‘section 
877(a)’’ in subsection (d). 
(e) CLERICAL AMENDMENT.—The table of sections for 
subpart A of part II of subchapter N of chapter 1 is amend-
ed by inserting after the item relating to section 877 the 
following new item: 
‘‘Sec. 877A. Tax responsibilities of expatriation.’’. 
(f) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in this 
subsection, the amendments made by this section shall 
apply to expatriates (as defined in section 877A(g) of 
the Internal Revenue Code of 1986, as added by this 
section) whose expatriation date (as so defined) is on 
or after the date of the enactment of this Act. 
(2) GIFTS AND BEQUESTS.—Chapter 15 of the 
Internal Revenue Code of 1986 (as added by sub-
section (b)) shall apply to covered gifts and bequests 
(as defined in section 2801 of such Code, as so added) 
received on or after the date of the enactment of this