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Request for Information Letter on Residence for Gift Tax Purposes and Nonresident Alien Gift to U.S. Citizen

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This letter responds to your request for information regarding rules under the Internal Revenue Code (“Code”) for determining whether an individual is a resident of the United States for gift tax purposes. You also requested information regarding the rules that may apply to a gift made by a nonresident alien individual to a U.S. citizen. 

The Gift Tax
1.Imposition of the Gift Tax
Section 2501(a)(1) of the Code provides that a tax is imposed for each calendar year on the transfer of property by gift during such calendar year by any individual, resident or nonresident. Section 2501(a)(2) provides that except as provided in § 2501(b)(3), §2501(a)(1) does not apply to the transfer of intangible property by a nonresident not a citizen of the United States. Section 2501(a)(3)(A) provides that § 2501(a)(2) does not apply in the case of a donor to whom § 877(b) applies for the taxable year which includes the date of the transfer.Section 25.2501- 1(a)(1) of the Gift Tax Regulations provides that…