Understanding Covered Gifts and Bequests

Offshore Tax with HTJ.tax · Apr 8, 2026 · 1m

When dealing with cross-border transfers from former U.S. citizens or long-term residents, Section 2801 of the Internal Revenue Code introduces a unique regime: taxation of “covered gifts and bequests.”In this episode, we clarify one critical protection built into the rules—avoiding double taxation.⚖️ 1️⃣ What Are Covered Gifts and Bequests?These rules apply when:• A U.S. person receives assets • From a covered expatriateInstead of taxing the donor, the U.S. taxes the recipient.🔁 2️⃣ The Double Taxation ConcernWithout safeguards, the same asset could be:• Taxed once as a covered gift, and •…