U.S. gift tax and U.S. estate tax do not cover the same property for a family that lives outside the United States. Estate tax reaches U.S.-situs assets of a non-resident alien at death, with a limited exemption. Gift tax, during life, generally does not reach intangibles — stock, and in the ordinary case a partnership interest — even when the company is American. It does reach U.S. real property and tangible personal property that is located in the United States. Advisers who apply the estate-tax map to a lifetime gift, or the gift-tax map to a death, mis-describe both taxes.
This article is the gift-tax map. It is written for the referring banker, family office, or RIA, not as a return position. Domicile, situs, and any treaty are facts. We advise on legal structure and coordinate with tax advisers on whether a particular transfer is a taxable gift.
Who Counts as a Non-Resident Alien for Gift Tax
The gift tax uses domicile, not the income-tax definition of residence. A person is a resident for gift-tax purposes if that person is domiciled in the United States: physically present, with the intent to remain. A non-resident alien, in this article, means a non-citizen who is not domiciled in the United States. Substantial presence can make someone a U.S. income-tax resident without making them a gift-tax resident. The reverse is also possible. A green card, a visa, and a pattern of winters in Miami are facts in both analyses, and they are not automatically the same answer. Citizenship is its own category: a U.S. citizen is generally subject to gift tax on worldwide gifts, wherever domiciled.
Section 2501(a) imposes the tax on gifts by residents and nonresidents. Section 2501(a)(2) then turns it off for a transfer of intangible property by a nonresident who is not a citizen, except in the expatriation case noted below. Section 2511(b) states the companion rule: for a nonresident alien, the tax applies to a transfer only if the property is situated in the United States. The two sections are how "intangibles are out, U.S. real and tangible property are in" becomes a rule rather than a practice pointer.
Intangibles: Generally Outside the Tax
Stock is intangible property. A gift of shares in a U.S. corporation, or in a foreign corporation, by a non-resident alien is generally not subject to U.S. gift tax. The location of the certificate, the place of the closing, and the fact that the company owns a building in Miami do not, by themselves, convert the stock into U.S.-situs property for gift tax. An interest in a partnership or an LLC is generally treated as intangible property as well. That treatment should be confirmed on the entity's classification. An entity that is disregarded for U.S. tax purposes may be looked through, and a gift of the interest may be analyzed as a gift of the underlying assets. See The Form 8832 Election in Offshore Holding Structures.
Debt is generally intangible. Cash, in the sense of currency physically located in the United States, is generally tangible personal property, and a gift of it is a different transaction from a transfer of a claim on a bank. The form — currency, a check, a wire from a foreign account — is fact-specific enough that the tax adviser should confirm it before anyone treats a cash gift as outside the tax. The planning point is the category, not a technique for moving banknotes.
U.S. Real Property and Tangible Property: Generally Inside the Tax
Real property located in the United States is situated in the United States. A gift of a house, a condominium, or commercial property by a non-resident alien is generally a taxable gift. Tangible personal property located in the United States — art on the wall of the Miami residence, a boat, a car, currency in a U.S. safe-deposit box — is generally a taxable gift. The same objects located outside the United States are generally not.
The lifetime basic exclusion amount does not apply to these gifts. Section 2505 allows the unified credit to a citizen or resident of the United States. A non-resident alien generally does not receive the $15 million basic exclusion amount that Rev. Proc. 2025-32 confirms for citizens and domiciliaries in 2026. What does generally apply is the annual exclusion for a present interest. For 2026 that amount is $19,000 per donee, under Section 2503(b), as confirmed in the same revenue procedure. A gift above that exclusion is a taxable gift, computed from the rate schedule, subject to any treaty that changes the result. There is no general lifetime cushion of the kind a U.S. domiciliary has.
Gifts to a spouse follow their own rule. An unlimited marital deduction is generally available for a gift to a spouse who is a U.S. citizen. It is not available, on the same terms, for a gift to a spouse who is not a U.S. citizen. Section 2523(i) provides an increased annual exclusion for those gifts instead. Rev. Proc. 2025-32 sets that amount at $194,000 for 2026. A gift of U.S. real property to a non-citizen spouse above that figure is generally a taxable gift even though the same gift to a citizen spouse generally would not be.
The Estate-Tax Asymmetry, Stated as a Rule
The gift-tax rule for stock and the estate-tax rule for stock point in different directions, and both are real. Shares of a U.S. corporation are generally U.S.-situs property for the estate tax. At the death of a non-resident alien they are generally included in the taxable estate. The exemption available against that estate tax is the limited statutory exemption of $60,000, unless a treaty provides a different credit or marital provision. It is not the basic exclusion amount available to citizens and domiciliaries. A lifetime gift of those same shares is generally not a U.S. taxable gift, because the shares are intangible property.
That difference is why families sometimes transfer U.S. equities, or interests in holding companies, during life rather than holding them until death. It is a structural observation. It is not a reason to ignore a retained right to live in the property, a step transaction, home-country gift tax, or the income-tax basis the donee takes under Section 1015. Property that passes at death and is included in the gross estate is the property that generally takes a basis under Section 1014. Property given during life generally does not. And a partnership interest that was outside the gift tax can still be a difficult estate-tax situs question, particularly if the partnership holds U.S. assets and is transparent. See Canada LPs in Cross-Border Wealth Structures and Irrevocable Trusts and U.S. Estate Planning for Non-Citizens.
What the Distinction Means for a Transfer Ahead of a Sale
If the donor is a non-resident alien and the asset is stock or a partnership interest, the U.S. gift-tax reason to transfer before a valuation step-up — using less of a lifetime exclusion — often does not exist, because there is no U.S. gift tax on the intangible in either period. The reasons that remain are the ones that are easy to skip. Home-country tax may apply to the gift at home-country value. The buyer’s documents may still prohibit the transfer. If the rollover is into a U.S. partnership or U.S. corporation, what the family owns after closing may be a different situs asset at death than what it owned before. If the donor gives the Miami real estate itself, or tangible property, the gift is generally taxable without the lifetime exclusion, and "we did it before the LOI" does not change the category. The timing article for U.S. donors, and the reasons timing still matters when a price is about to be fixed, is Rollover Equity: Transferring Interests Before the Valuation Step-Up. The sequence with deal counsel is in Gifting Ahead of a Liquidity Event.
A gift of shares in a foreign corporation that holds the real estate is generally a gift of an intangible. It is not, for that reason alone, a completed plan. If the donor keeps the use of the property, Section 2036 can include U.S.-situs assets in the estate. If the corporation is a shell and the substance is a gift of the real estate, the form can be challenged. If the family wanted a partnership wrapper and a discount, the partnership has to be a real one. See Family Limited Partnerships and Trust-Owned LPs. A sale to a trust works as an intentionally defective grantor trust only if the settlor is a grantor for U.S. income tax, which Section 672(f) usually prevents for a non-U.S. settlor. See Selling to an Intentionally Defective Grantor Trust Versus Gifting.
Expatriates, and the Recipient's Tax
The intangible-property exception has a statutory limit. Section 2501(a)(3) provides that it does not apply to a donor to whom Section 877(b) applies for the year of the transfer. Separately, Section 2801 can tax a U.S. citizen or resident who receives a covered gift or covered bequest from a covered expatriate. That tax is on the recipient. It is not a restatement of the donor's gift tax, and the donor-side exception for intangibles does not turn it off. Rev. Proc. 2025-32 provides that for 2026 the Section 2801 tax applies only to the extent covered gifts and bequests received during the year exceed $19,000. Whether someone is a covered expatriate is a tax-adviser determination. It should be made before the family assumes a gift of U.S. stock is outside every U.S. transfer tax.
When a Family Member Is, or Becomes, a U.S. Person
The usual case is someone already in the family who becomes a U.S. person — a green card, enough days to meet substantial presence, a shift in domicile — or a child born a U.S. citizen, or a family that has had a U.S. person in it all along. Each of those facts changes a different piece of the analysis.
If the donor becomes a U.S. citizen, or becomes domiciled in the United States, worldwide gifts generally enter the U.S. gift tax, and the basic exclusion amount becomes relevant. Domicile and income-tax residence need not start on the same day. Pre-immigration transfers of property, made while the donor is still a non-resident alien and while the asset is still intangible and outside U.S. gift tax, are a standard part of the work — subject to the anti-abuse rules that apply if the person is a covered expatriate, and subject to home-country tax. See Pre-Immigration Planning for LATAM Families.
If the recipient is a U.S. person, a true gift is generally not income, under Section 102. Reporting can still apply. IRS guidance requires a U.S. person to report, on Form 3520, gifts from a non-resident alien or a foreign estate when the aggregate from that donor and related persons exceeds $100,000 in the year. Gifts from foreign corporations and foreign partnerships are reported at a lower, inflation-adjusted threshold. The form is an information return. Penalties for failing to file it are computed on the amount, and they are a reason to know about the gift before April, not a reason to treat the gift as taxable income. A distribution from a foreign trust is not automatically "a gift from a parent." It may be a trust distribution with throwback consequences, which depends on whether the trust is a foreign grantor trust or a foreign non-grantor trust. See FGT vs. FNGT for International Families and When a Family Member Becomes a U.S. Person.
Treaties sit on top of this map and sometimes change the credit, the marital deduction, or the situs of a particular asset. They do not apply because the family is from a treaty country. They apply when the person qualifies and the article covers the tax. The referring adviser's job is to know which of the two U.S. taxes — gift or estate — a proposed transfer is actually in, and to bring counsel in before a deed, a share transfer, or a wire makes the choice. That is the private wealth conversation, alongside the narrower estate-tax work for foreign nationals who hold U.S. assets directly.