U.S. Estate and Gift Tax Treaties (Portfolio 851)

Description

Tax Management Portfolio, U.S. Estate and Gift Tax Treaties, No. 851, describes the purpose, operation, and construction of the 17 estate and gift transfer tax treaties to which the United States is a party, as well as the income tax treaty with Canada, which bears on U.S. transfer taxes as well as Canadian income tax at death. The portfolio is divided into six parts. Part I: Introduction, explains the purpose and types of transfer tax treaties. Part II: Situs-Type Treaties, describes when situs-type transfer tax treaties apply and explains how a situs-type treaty assigns primary taxing jurisdiction to one country. It also analyzes the effect that situs-type treaties have on the deductions and credits of treaty countries. Part III: Domicile-Type Treaties, describes when domicile-type treaties apply and how these treaties assign primary taxing jurisdiction. It also analyzes the situs rules that are incorporated into domicile-type treaties, the effect that domicile-type treaties have on the deductions, exemptions, and credits of treaty countries, and the general operation of the treaties’ nondiscrimination provisions. Part IV: Special, Administrative, and Enforcement Provisions, discusses the ways in which transfer tax treaties enable a treaty country to enforce the collection of death taxes and exchange information with the other country, as well as issues that a taxpayer subject to a treaty may face in reporting income. Part V: Treaty Interpretation, sets forth the principles of treaty interpretation and construction. Part VI: Particular Treaty Analysis, discusses the details of each transfer tax treaty.

The bilateral transfer tax treaties to which the United States is a party seek to prevent double taxation that could otherwise result when the United States and another country impose death or other transfer taxes with respect to the same property. Without a treaty, the two countries could tax the same property because the property has its situs in one or both countries and/or because the relevant person is affiliated with one or both of the countries. The various situs-type treaties, most of which entered into effect in the 1940s and 1950s, seek to prevent double taxation by providing rules for determining the situs of assets and by giving primary taxing jurisdiction to the country in which the assets are deemed situated. The later domicile-type treaties, on the other hand, assign taxing jurisdiction to the treaty country in which — under the treaty rules — the relevant person has or had his or her fiscal domicile. Fiscal domicile is a particular concept of personal affiliation that the domicile-type treaties have developed. Even in domicile-type treaties, however, certain types of assets are taxed according to the assets’ location.

This portfolio may be cited as Schoenblum, 851 T.M., U.S. Estate and Gift Tax Treaties.

Table of Contents

I. Introduction
II. Situs-Type Treaties
III. Domicile-Type Treaties
IV. Special, Administrative, and Enforcement Provisions
V. Treaty Interpretation
VI. Particular Treaty Analysis