Generally, transfers of intangible property by a nonresident not a citizen of the United States are not subject to transfer taxation. (26 U.S.C.A. § 2501.) However, there is an exception where the donor is subject to the alternative income tax regime of §877 (Expatriation to avoid tax). (Id.) For these nonresidents the transfer of intangible property is subject to tax if the property is deemed situated within the United States. (§ 2511.) Debt obligations, such as promissory notes, of a United States person owned and held by a nonresident are deemed to be situated within the United States. (§ 25.2511-3.)


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IRS CIRCULAR 230 NOTICE: ANY TAX ADVICE CONTAINED IN THIS ELECTRONIC COMMUNICATION (INCLUDING ANY ATTACHMENTS) IS NOT INTENDED TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING PENALTIES UNDER THE INTERNAL REVENUE CODE OR APPLICABLE STATE OR LOCAL TAX LAW PROVISIONS, OR PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PERSON OR PARTY ANY TAX-RELATED MATTER ADDRESSED HEREIN.

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