Definitions — Instruction 708 — Instructions for Form 708

U.S. citizen or resident. A U.S. citizen or resident is an individual who is a citizen or resident of the United States. For section 2801 purposes, the term “resident” follows the gift and estate tax definition of the term, which is based on domicile. A person acquires a domicile in a place by living there, even for a brief period of time, with no definite present intention of moving from there. See Regulations sections 20.0-1(b)(1), 25.2501-1(b), and 28.2801-2(b). References to a U.S. citizen also include a domestic trust or an electing foreign trust, but only for section 2801 purposes and not for purposes of determining an individual’s status as an expatriate or covered expatriate.

Note: A person may be a U.S. resident for gift, estate, and section 2801 tax purposes, yet be considered a nonresident for income tax purposes.

Domestic trust. A domestic trust is any trust if:

A court within the U.S. is able to exercise primary supervision over the administration of the trust; and
One or more U.S. persons have the authority to control all substantial decisions of the trust.

See Regulations section 301.7701-7 for more information.

Foreign trust. A trust that isn’t a domestic trust is a foreign trust.

Electing foreign trust. For section 2801 purposes, an electing foreign trust is a foreign trust that has in place a valid election to be treated as a domestic trust solely for purposes of section 2801. See section 2801(e)(4)(B)(iii) and Regulations section 28.2801-5(d) for more information.

Non-electing foreign trust. For section 2801 purposes, a non-electing foreign trust is any foreign trust that isn’t an electing foreign trust.

Migrated foreign trust. For section 2801 purposes, the term “migrated foreign trust” refers to a non-electing foreign trust that receives a covered gift or covered bequest (in the applicable calendar year or any prior year) and subsequently becomes a domestic trust. For information on the special rules that apply for the year in which the trust becomes a domestic trust, see discussion of migrated foreign trusts in Liability for and Payment of Section 2801 Tax , later, and Regulations section 28.2801-4(a)(2)(iv).

Instructions for Form 708 (12-2025) 3

U.S. recipient. For section 2801 purposes, a U.S. recipient is a U.S. citizen or resident (which includes a domestic trust and an electing foreign trust) that receives a covered gift or covered bequest, whether directly or indirectly, during the applicable calendar year. For example, a U.S. citizen or resident receiving a distribution from a non-electing foreign trust that is attributable (in whole or in part) to one or more covered gifts or covered bequests received by such trust is a U.S. recipient. A U.S. recipient also includes a U.S. citizen or resident who is a shareholder, partner, or other interest-holder, as the case may be (if any), of a domestic business entity that receives a covered gift or covered bequest.

Covered bequest. For section 2801 purposes, with certain exceptions, a covered bequest is any property acquired by a recipient on or after June 17, 2008, directly or indirectly by reason of the death of a covered expatriate, regardless of the property’s location and whether such property was acquired by the covered expatriate before or after expatriation from the United States, but only to the extent the property would have been included in the covered expatriate’s gross estate for Federal estate tax purposes if the covered expatriate had been a U.S. citizen immediately before death. A covered bequest also includes any other property not acquired by reason of the death of a covered expatriate that would have been included in the covered expatriate’s gross estate for Federal estate tax purposes if the covered expatriate had been a U.S. citizen immediately before death. Finally, a covered bequest includes distributions made by reason of the death of a covered expatriate from a non-electing foreign trust to the extent the distributions are attributable to covered gifts and covered bequests made to the non-electing foreign trust on or after June 17, 2008.

Note: The term (covered bequest) does not include certain property that was timely reported as subject to estate tax, certain property that previously was subject to section 2801 tax as a covered gift, certain transfers to charity and to the covered expatriate’s spouse, and certain property transferred pursuant to a covered expatriate’s qualified disclaimer. See Regulations section 28.2801-3 for additional information on the rules and exceptions applicable to the term covered bequest.

Covered gift. For section 2801 purposes, with certain exceptions, a covered gift is any property acquired on or after June 17, 2008, by gift directly or indirectly from an individual who is a covered expatriate at the time the property is received by the recipient, regardless of the property’s location and whether such property was acquired by the covered expatriate before or after expatriation from the United States. A covered gift also includes distributions made, other than by reason of the death of a covered expatriate, from a non-electing foreign trust to the extent that the distributions are attributable to covered gifts and covered bequests made to the non-electing foreign trust on or after June 17, 2008. See Regulations section 28.2801-3 for additional rules and exceptions applicable to the term covered gift.

Note: The term (covered gift) does not include certain property that was timely reported as subject to gift tax, certain transfers to charity and to the covered expatriate’s spouse, and certain property transferred pursuant to a covered expatriate’s qualified disclaimer. See Regulations section 28.2801-3 for additional information on the rules and exceptions applicable to the term covered bequest.

Expatriate. An expatriate is any U.S. citizen who has relinquished their citizenship and any long-term resident who has ended their residency in the United States (expatriated) on or after June 17, 2008.

Long-term resident (LTR) defined. A U.S. resident individual is an LTR if the individual was a lawful permanent resident of the United States in at least 8 of the last 15 tax years ending with the year the individual is no longer treated as a lawful permanent resident. In determining if an individual meets the 8-year requirement, don’t count any year if in that year the individual was treated as a resident of a foreign country under a tax treaty and did not waive treaty benefits applicable to residents of that country.

Lawful permanent resident. An individual is a lawful permanent resident of the United States if the individual has been given the privilege, according to U.S. immigration laws, of residing permanently in the United States as an immigrant. An individual generally has this status if the individual has been issued an alien registration card, also known as a green card, and the green card hasn’t been revoked, or judicially or administratively determined to have been abandoned. However, an individual is also no longer treated as a lawful permanent resident if the individual commenced to be treated as a resident of a foreign country under the provisions of a tax treaty, did not waive the benefits of such treaty, and notified the IRS of the commencement of such treatment.

Expatriation and expatriation date. Expatriation includes the acts of relinquishing U.S. citizenship and terminating long-term residency. The expatriation date is the date that a U.S. citizen relinquishes their citizenship, or the date any long-term resident ends their residency in the United States.

Date of relinquishment of U.S. citizenship. An individual is considered to have relinquished their U.S. citizenship (and consequently, have an expatriation date) on the earliest of the following dates.

The date the individual renounced U.S. citizenship before a diplomatic or consular officer of the United States (provided that the individual’s voluntary renouncement was later confirmed by the issuance of a certificate of loss of nationality).
The date the individual furnished to the State Department a signed statement of the individual’s voluntary relinquishment of a U.S. nationality confirming the performance of an expatriating act (provided that the individual’s voluntary relinquishment was later confirmed by the issuance of a certificate of loss of nationality).
The date the State Department issued a certificate of loss of nationality.
The date a U.S. court canceled the individual’s certificate of naturalization.

Date of termination of long-term residency. An individual LTR is considered to have terminated lawful permanent residency (and consequently, have an expatriation date) on the earliest of the following dates.

The date the individual voluntarily abandoned lawful permanent resident status by filing Department of Homeland Security Form I-407 with a U.S. consular or immigration officer.
The date the individual became subject to a final administrative order that the individual abandoned lawful permanent resident status (or, if such order has been appealed, the date of a final judicial order issued in connection with such administrative order).

4 Instructions for Form 708 (12-2025)

The date the individual became subject to a final administrative or judicial order for the individual’s removal from the United States under the Immigration and Nationality Act.
If the individual was a dual resident of the United States and a country with which the United States has an income tax treaty, the date on which the individual commenced to be treated as a resident of that country under the treaty, did not waive the benefits of the treaty, and gave notice to the IRS of the commencement of such treatment.

Covered expatriate. A covered expatriate is an expatriate whose expatriation date occurs after June 16, 2008, and to whom any of the following statements apply.

The expatriate’s average annual net income tax liability for the 5 tax years ending before the date of expatriation is more than a certain amount that is adjusted for inflation. For 2025, this amount is $206,000. For 2026, this amount is $211,000.
The expatriate’s net worth was $2 million or more on the expatriation date.
The expatriate fails to certify on Form 8854, Initial and Annual Expatriation Statement, that the expatriate has complied with all federal tax obligations for the 5 tax years preceding the expatriation date.

The determination of whether an expatriate is a covered expatriate is made as of the individual’s expatriation date, and if an expatriate meets the definition of a covered expatriate, the expatriate is a covered expatriate at all times after the expatriation date. However, an expatriate is not treated as a covered expatriate during any period beginning after the expatriation date during which such individual is subject to U.S. estate or gift tax as a U.S. citizen or resident. An individual’s status as a covered expatriate will be determined as of the date of the most recent expatriation, if there has been more than one.

Exception for dual-citizens and certain minors. Certain dual-citizens and certain minors (defined next) won’t be treated as covered expatriates for purposes of section 2801 solely because one or both statements in paragraph (1) or (2) under Covered expatriate, above, apply. However, these individuals will still be treated as covered expatriates unless they file Form 8854 and certify that they have complied with all federal tax obligations for the 5 tax years preceding the date of expatriation as required in paragraph (3) (under Covered expatriate, earlier).

Certain dual-citizens. An individual can qualify for the exception for dual-citizens described above if the individual meets both of the following requirements.

The individual became at birth a U.S. citizen and a citizen of another country and, as of the individual’s expatriation date, continues to be a citizen of, and is taxed as a resident of, that other country.
The individual was a resident of the United States for not more than 10 years during the 15 tax-year period ending with the tax year during which the individual expatriated. For the purpose of determining U.S. residency, use the substantial presence test described in chapter 1 of Pub. 519, U.S. Tax Guide for Aliens.

Certain minors. An individual can qualify for the exception for certain minors described above if the individual meets both of the following requirements.

The individual expatriated before attaining 18 1/2 years of age.
The individual was a resident of the United States for not more than 10 tax years before the individual expatriated. For the purpose of determining U.S. residency, use the substantial presence test described in chapter 1 of Pub.

Power of appointment. For section 2801 purposes, the term “power of appointment” refers to both a general and non-general power of appointment, except as expressly limited to one or the other. A general power of appointment is as defined in sections 2041(b)(1) and 2514(c), without regard to the exception in section 2041(b)(2) or 2514(e). A non-general power of appointment is any power of appointment that is not a general power of appointment. The exercise or release of a general power of appointment held by a covered expatriate over property for the benefit of a U.S. recipient is a covered gift or covered bequest. The grant by a covered expatriate to an individual who is a U.S. citizen or resident of a general power of appointment over property not held in trust is a covered gift or covered bequest to the powerholder.

Section 2801(c) amount. The section 2801(c) amount is the dollar amount of the gift tax exclusion in effect under section 2503(b) for the applicable calendar year. For 2025 and 2026, the section 2801(c) amount is $19,000. In calculating the section 2801 tax, the section 2801(c) amount reduces or eliminates the aggregate value of covered gifts and covered bequests received by a U.S. citizen or resident during a calendar year. See Net covered gifts and covered bequests , later, for more details.

Section 2801 ratio. The section 2801 ratio reflects the portion of a non-electing foreign trust that is attributable to covered gifts and covered bequests that the trust has received as of a certain date, including the ratable portion of appreciation and income that has accrued on that portion of the trust’s assets from the date of contribution, as compared to the total fair market value of the trust. The section 2801 ratio can range from 0 to 1. It is computed by adding the pre-contribution value of the trust attributable to covered gifts and covered bequests with the portion, if any, of the fair market value of the current contribution that constitutes a covered gift or covered bequest. The sum is divided by the fair market value of the trust immediately after the current contribution. This ratio is determined in Part VI, Section 2 to calculate the section 2801 tax on distributions received from a foreign trust and in Part IV, Section 3 to calculate the section 2801 tax when a foreign trust elects to be treated as a domestic trust or when a foreign trust becomes a migrated foreign trust.