‘‘(A) the last date for the payment of tax 
shall be determined without regard to the election 
under this subsection, and 
‘‘(B) section 6621(a)(2) shall be applied by 
substituting ‘5 percentage points’ for ‘3 percent-
age points’ in subparagraph (B) thereof. 
‘‘(c) COVERED EXPATRIATE.—For purposes of this sec-
tion—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the term ‘covered expatriate’ means an ex-
patriate. 
‘‘(2) EXCEPTIONS.—An individual shall not be 
treated as a covered expatriate if—
‘‘(A) the individual—
‘‘(i) became at birth a citizen of the 
United States and a citizen of another 
country and, as of the expatriation date, 
continues to be a citizen of, and is taxed as 
a resident of, such other country, and 
‘‘(ii) has not been a resident of the 
United States (as defined in section 
7701(b)(1)(A)(ii)) during the 5 taxable 
years ending with the taxable year during 
which the expatriation date occurs, or
‘‘(B)(i) the individual’s relinquishment of 
United States citizenship occurs before such indi-
vidual attains age 181⁄2, and 
‘‘(ii) the individual has been a resident of 
the United States (as so defined) for not more 
than 5 taxable years before the date of relin-
quishment. 
‘‘(d) EXEMPT PROPERTY; SPECIAL RULES FOR PEN-
SION PLANS.—
‘‘(1) EXEMPT PROPERTY.—This section shall not 
apply to the following: 
‘‘(A) UNITED STATES REAL PROPERTY IN-
TERESTS.—Any United States real property in-
terest (as defined in section 897(c)(1)), other 
than stock of a United States real property hold-
ing corporation which does not, on the day before 
the expatriation date, meet the requirements of 
section 897(c)(2). 
‘‘(B) SPECIFIED PROPERTY.—Any property 
or interest in property not described in subpara-
graph (A) which the Secretary specifies in regu-
lations. 
‘‘(2) SPECIAL RULES FOR CERTAIN RETIREMENT 
PLANS.—
‘‘(A) IN GENERAL.—If a covered expatriate 
holds on the day before the expatriation date any 
interest in a retirement plan to which this para-
graph applies—
‘‘(i) such interest shall not be treated 
as sold for purposes of subsection (a)(1), but 
‘‘(ii) an amount equal to the present 
value of the expatriate’s nonforfeitable ac-
crued benefit shall be treated as having been 
received by such individual on such date as 
a distribution under the plan. 
‘‘(B) TREATMENT
OF
SUBSEQUENT
DIS-
TRIBUTIONS.—In the case of any distribution on 
or after the expatriation date to or on behalf of 
the covered expatriate from a plan from which 
the expatriate was treated as receiving a dis-
tribution under subparagraph (A), the amount 
otherwise includible in gross income by reason of 
the subsequent distribution shall be reduced by 
the excess of the amount includible in gross in-
come under subparagraph (A) over any portion 
of such amount to which this subparagraph pre-
viously applied. 
‘‘(C) TREATMENT
OF
SUBSEQUENT
DIS-
TRIBUTIONS BY PLAN.—For purposes of this title,
a retirement plan to which this paragraph ap-
plies, and any person acting on the plan’s behalf, 
shall treat any subsequent distribution described 
in subparagraph (B) in the same manner as 
such distribution would be treated without re-
gard to this paragraph. 
‘‘(D) APPLICABLE PLANS.—This paragraph 
shall apply to—
‘‘(i) any qualified retirement plan (as 
defined in section 4974(c)), 
‘‘(ii) an eligible deferred compensation 
plan (as defined in section 457(b)) of an el-
igible 
employer 
described 
in 
section 
457(e)(1)(A), and 
‘‘(iii) to the extent provided in regula-
tions, any foreign pension plan or similar 
retirement arrangements or programs. 
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) 
EXPATRIATE.—The 
term 
‘expatriate’ 
means—
‘‘(A) any United States citizen who relin-
quishes citizenship, and 
‘‘(B) any long-term resident of the United 
States who—
‘‘(i) ceases to be a lawful permanent 
resident of the United States (within the 
meaning of section 7701(b)(6)), or 
‘‘(ii) commences to be treated as a resi-
dent of a foreign country under the provi-
sions of a tax treaty between the United 
States and the foreign country and who 
does not waive the benefits of such treaty 
applicable to residents of the foreign coun-
try. 
‘‘(2) EXPATRIATION DATE.—The term ‘expatria-
tion date’ means—
‘‘(A) the date an individual relinquishes 
United States citizenship, or 
‘‘(B) in the case of a long-term resident of 
the United States, the date of the event described 
in clause (i) or (ii) of paragraph (1)(B). 
‘‘(3) RELINQUISHMENT OF CITIZENSHIP.—A cit-
izen shall be treated as relinquishing United States 
citizenship on the earliest of—
‘‘(A) the date the individual renounces such 
individual’s United States nationality before a 
diplomatic or consular officer of the United 
States pursuant to paragraph (5) of section
349(a) of the Immigration and Nationality Act 
(8 U.S.C. 1481(a)(5)), 
‘‘(B) the date the individual furnishes to the 
United States Department of State a signed 
statement of voluntary relinquishment of United 
States nationality confirming the performance of 
an act of expatriation specified in paragraph 
(1), (2), (3), or (4) of section 349(a) of the Im-
migration and Nationality Act (8 U.S.C. 
1481(a)(1)–(4)), 
‘‘(C) the date the United States Department 
of State issues to the individual a certificate of 
loss of nationality, or 
‘‘(D) the date a court of the United States 
cancels a naturalized citizen’s certificate of natu-
ralization. 
Subparagraph (A) or (B) shall not apply to any in-
dividual unless the renunciation or voluntary relin-
quishment is subsequently approved by the issuance to 
the individual of a certificate of loss of nationality by 
the United States Department of State. 
‘‘(4) LONG-TERM
RESIDENT.—The term ‘long-
term resident’ has the meaning given to such term by 
section 877(e)(2).
‘‘(f) SPECIAL RULES APPLICABLE TO BENEFICIARIES’ 
INTERESTS IN TRUST.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), if an individual is determined under para-
graph (3) to hold an interest in a trust on the day 
before the expatriation date—
‘‘(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 allo-
cable to such share,
‘‘(ii) the separate trust shall be treated as 
having sold its assets on the day before the expa-
triation date for their fair market value and as 
having distributed all of its assets to the indi-
vidual 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 (C)(ii). In determining the 
amount of such distribution, proper adjustments shall
be made for liabilities of the trust allocable to an in-
dividual’s share in the trust. 
‘‘(2) SPECIAL RULES FOR INTERESTS IN QUALI-
FIED TRUSTS.—
‘‘(A) IN GENERAL.—If the trust interest de-
scribed in paragraph (1) is an interest in a 
qualified trust—
‘‘(i) paragraph (1) and subsection (a) 
shall not apply, and 
‘‘(ii) in addition to any other tax im-
posed by this title, there is hereby imposed 
on each distribution with respect to such in-
terest a tax in the amount determined 
under subparagraph (B). 
‘‘(B) AMOUNT OF TAX.—The amount of tax 
under subparagraph (A)(ii) shall be equal to the 
lesser of—
‘‘(i) the highest rate of tax imposed by 
section 1(e) for the taxable year which in-
cludes the day before the expatriation date, 
multiplied by the amount of the distribu-
tion, or 
‘‘(ii) the balance in the deferred tax ac-
count immediately before the distribution 
determined without regard to any increases
trust which is not a vested interest. Such 
interest shall be determined by assuming the 
maximum exercise of discretion in favor of 
the beneficiary and the occurrence of all 
contingencies in favor of the beneficiary. 
‘‘(iv) ADJUSTMENTS.—The Secretary 
may provide for such adjustments to the 
bases of assets in a trust or a deferred tax 
account, and the timing of such adjust-
ments, in order to ensure that gain is taxed 
only once. 
‘‘(v) COORDINATION WITH RETIREMENT 
PLAN
RULES.—This subsection shall not 
apply to an interest in a trust which is 
part of a retirement plan to which sub-
section (d)(2) applies. 
‘‘(3) DETERMINATION OF BENEFICIARIES’ INTER-
EST IN TRUST.—
‘‘(A) DETERMINATIONS UNDER PARAGRAPH 
(1).—For purposes of paragraph (1), a bene-
ficiary’s interest in a trust shall be based upon 
all relevant facts and circumstances, including 
the terms of the trust instrument and any letter 
of wishes or similar document, historical pat-
terns of trust distributions, and the existence of