Foreign-Situs Limits Under Section 2801

Offshore Tax with HTJ.tax · Apr 10, 2026 · 1m

• Certain relief mechanisms—such as spousal exclusions via trust elections— 👉 are limited to U.S.-situs assetsThis means:• Foreign assets may not benefit from the same treatment • The rules apply unevenly depending on where assets are located⚖️ 2️⃣ The Policy Objective: ParitySection 2801 was introduced to create parity between:• U.S. citizens (subject to estate and gift tax), and • Covered expatriates (who would otherwise fall outside the system)👉 The goal:• Prevent avoidance of U.S. transfer taxes through expatriation⚠️ 3️⃣ Where the System DivergesIn practice, the foreign-situs…