Section 11.22 Treaty and Debtor Tax Convention Rules

• Library: Estate Administration 2014 Supp

3. (§11.22) Treaty and Debtor Tax Convention Rules

The existence of treaties and death tax conventions between the United States and other nations is very important for the determination of the federal estate tax on nonresident aliens. Some of the agreements contain provisions permitting persons to live in the United States for specified periods without becoming domiciled in the United States for federal estate tax purposes. See, e.g., United States—Netherlands Estate Tax Treaty, art. 4(2) (effective Feb. 3, 1971), 22 U.S.T. 247 (1971). Second, the agreements may provide situs rules that alter the statutory and common-law rules that apply to nonresident aliens. The Code defers to the provisions of treaties and death tax conventions. Treas. Reg. § 20.2104-1(c). For example, although a leasehold interest in real property is generally not considered real property for purposes of determining the situs of the property interest and the taxability of that interest, Estate of de Perigny v. Comm’r, 9 T.C. 782, 784 (1947), nonacq., 1948-2 C.B. 2, the longer the term of the lease, the more likely it could be considered a “virtual fee simple,” and thus, the lease...