‘‘(B) SPECIAL RULE.—In the case of bene-
ficiaries whose interests in a trust cannot be de-
termined under subparagraph (A)—
‘‘(i) the beneficiary having the closest
degree of kinship to the grantor shall be
treated as holding the remaining interests
in the trust not determined under subpara-
graph (A) to be held by any other bene-
ficiary, and
‘‘(ii) if 2 or more beneficiaries have the
same degree of kinship to the grantor, such
remaining interests shall be treated as held
equally by such beneficiaries.
‘‘(C) CONSTRUCTIVE OWNERSHIP.—If a ben-
eficiary of a trust is a corporation, partnership,
trust, or estate, the shareholders, partners, or
beneficiaries shall be deemed to be the trust bene-
ficiaries for purposes of this section.
‘‘(D) TAXPAYER RETURN POSITION.—A tax-
payer shall clearly indicate on its income tax re-
turn—
‘‘(i) the methodology used to determine
that taxpayer’s trust interest under this sec-
tion, and
‘‘(ii) if the taxpayer knows (or has rea-
son to know) that any other beneficiary of
such trust is using a different methodology
to determine such beneficiary’s trust interest
under this section.
‘‘(2) DEEMED SALE IN CASE OF TRUST INTER-
EST.—If an individual who relinquishes his citizen-
ship during the taxable year is treated under para-
graph (1) as holding an interest in a trust for pur-
poses of this section—
‘‘(A) the individual shall not be treated as
having sold such interest,
‘‘(B) such interest shall be treated as a sep-
arate share in the trust, and
‘‘(C)(i) such separate share shall be treated
as a separate trust consisting of the assets alloca-
ble to such share,
‘‘(ii) the separate trust shall be treated as
having sold its assets immediately before the re-
linquishment for their fair market value and as
having distributed all of its assets to the individ-
ual as of such time, and
‘‘(iii) the individual shall be treated as hav-
ing recontributed the assets to the separate trust.
Subsection (a)(2) shall apply to any income, gain, or
loss of the individual arising from a distribution de-
scribed in subparagraph (B)(ii).
‘‘(g) TERMINATION OF DEFERRALS, ETC.—On the date
any property held by an individual is treated as sold under
subsection (a), notwithstanding any other provision of this
title—
‘‘(1) any period during which recognition of in-
come or gain is deferred shall terminate, and
‘‘(2) any extension of time for payment of tax
shall cease to apply and the unpaid portion of such
tax shall be due and payable at the time and in the
manner prescribed by the Secretary.
‘‘(h) RULES RELATING TO PAYMENT OF TAX.—
‘‘(1) IMPOSITION OF TENTATIVE TAX.—
‘‘(A) IN GENERAL.—If an individual is re-
quired to include any amount in gross income
under subsection (a) for any taxable year, there
is hereby imposed, immediately before the indi-
vidual relinquishes United States citizenship, a
tax in an amount equal to the amount of tax
which would be imposed if the taxable year were
a short taxable year ending on the date of such
relinquishment.
‘‘(B) DUE DATE.—The due date for any tax
imposed by subparagraph (A) shall be the 90th
day after the date the individual relinquishes
United States citizenship.
‘‘(C) TREATMENT OF TAX.—Any tax paid
under subparagraph (A) shall be treated as a
payment of the tax imposed by this chapter for
the taxable year to which subsection (a) applies.
‘‘(2) DEFERRAL OF TAX.—The provisions of sec-
tion 6161 shall apply to the portion of any tax attrib-
utable to amounts included in gross income under
subsection (a) in the same manner as if such portion
were a tax imposed by chapter 11.
‘‘(i) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section, including regulations
providing appropriate adjustments to basis to reflect gain
recognized by reason of subsection (a) and the exclusion pro-
vided by subsection (b).
‘‘(j) CROSS REFERENCE.—
‘‘For termination of United States citizenship for
tax purposes, see section 7701(a)(47).’’
(b) DEFINITION OF TERMINATION OF UNITED STATES
CITIZENSHIP.—Section 7701(a) of the Internal Revenue
Code of 1986 is amended by adding at the end the following
new paragraph: