U.S.-situs property

How it works

U.S. situs generally turns on the location or classification of property owned at death. Real property located in the United States and tangible personal property physically present there on the date of death are treated as U.S.-situs property, subject to an exception for certain works of art on loan.

An applicable death tax convention with a foreign country may modify situs rules for various purposes. The described rules apply unless a treaty provides otherwise.

Where it shows up for owners of businesses, real estate and private investments

U.S. real estate is a direct example of property classified by its physical location. Tangible personal property also falls within the described category when it is physically present in the United States at death.

Stock of a U.S. corporation is described in practitioner commentary as U.S.-situs property under a provision of the Internal Revenue Code. Practitioners note the certificate's location, custody account and location of underlying assets do not determine that classification.

Stock in a foreign corporation is described in practitioner commentary as outside the U.S.-situs category, even when that corporation owns U.S. assets, if the corporation is respected for U.S. tax purposes. Partnership situs is described as less clear because the Internal Revenue Code and Treasury regulations do not address it.

Points that are easy to confuse

U.S.-situs property is a location and classification concept for the gross estate of a nonresident decedent who is not a U.S. citizen. The rule ties that gross estate to property situated in the United States at death, not to every asset owned by the decedent.

The situs of corporate stock is distinct from the location of the corporation's assets. Estate planning practitioners describe different treatment for stock of U.S. corporations and stock of foreign corporations, while noting uncertainty for partnership interests.

Common questions