Gift tax for non-residents on cash transfer between US brokerage accounts

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DrBogdan

Does anyone know whether there is a gift tax in the event if one non-resident alien transfers cash from his US brokerage account to another non-resident alien's US brokerage account? Found a PDF file that classifies brokerage accounts as intangible assets, thus making cash on the account not subject to gift tax when transferred between non-resident aliens. Is that so?
https://www.gbslife.com/media/28493/020 ... tizens.pdf
 
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DrBogdan said:
Does anyone know whether there is a gift tax in the event if one non-resident alien transfers cash from his US brokerage account to another resident alien's US brokerage account? Found a PDF file that classifies brokerage accounts as intangible assets, thus making cash on the account not subject to gift tax when transferred between non-resident aliens. Is that so?
https://www.gbslife.com/media/28493/020 ... tizens.pdf
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If you are a foreigner, US tax laws do not apply to you. You are subject to provisions of the tax code applicable to foreigners. The same goes for US citizens living in a foreign country. A broker just handles the stock transactions, they do not write any tax laws but, only follow them. Always consult a tax attorney if you have substantial assets or a tax accountant who has experience in handling foreign transactions. You can always go to the IRS.gov website for the actual tax laws of the US.
 
smallfil said:
If you are a foreigner, US tax laws do not apply to you. You are subject to provisions of the tax code applicable to foreigners. The same goes for US citizens living in a foreign country. A broker just handles the stock transactions, they do not write any tax laws but, only follow them.
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You see, I thought the same way until I found out that non-resident aliens don't pay gift taxes only on transfers of intangible property located in US. This definitely includes stocks but I'm not sure about cash on the brokerage account. Everyone says differently. If its deemed tangible, then you do have to pay up to 40 percent of the sum you transfer as a gift to your close relative, which is your hard-earned money and the origins of which have nothing to do with US, to the US Government.
 
DrBogdan said:
You see, I thought the same way until I found out that non-resident aliens don't pay gift taxes only on transfers of intangible property located in US. This definitely includes stocks but I'm not sure about cash on the brokerage account. Everyone says differently
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Cash is intangible? I don't think so. Maybe, crypto currency but, not cash. Still, US tax laws are different for foreigners and US citizens. Better to not get in trouble with the US Internal Revenue Service. Consult a qualified tax expert. It is your best move. Take note, the material you are referencing both states that cash is intangible in one part of the material and at the bottom, says cash is tangible. It might be a typo on their part.
 
I don't see how that can be up to US regulation, your resident country deals with this as it's effectively just a gift.
 
smallfil said:
The same goes for US citizens living in a foreign country.
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No, that's not accurate.

US citizens are subject to US tax laws regardless of what country they live in, and they are taxed on their worldwide income.

There are some provisions of US tax law which make it possible, in some cases, to exclude earned income that is earned while living in a foreign country. And there are other provisions that allow a credit for income tax paid to a foreign country. These provisions make it possible, in many cases, to avoid paying tax to two different countries on the same income.

But US citizens are required to report all worldwide income on their tax return, regardless of where the income was generated, and regardless of where they are living.
 
smallfil said:
Cash is intangible? I don't think so.
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The original question refers to transferring "cash" from the brokerage account of one person to the brokerage account of another person.

That's not really cash. It is often referred to as "cash" within a brokerage account because it is not securities. It is available to buy securities or to be withdrawn. So it is "cash" in the sense of a category of investments. But it is not currency.

Money in an account at a financial institution is generally regarded as an intangible asset.

The word tangible means something you can physically touch, like cars, boats, jewelry, funiture, etc.

You cannot physically touch the money in your bank or brokerage account. The bank or broker does not have a specific pile of currency stored in a vault that is your property. It is an asset that exists only as an entry in the bank's books.

It is an asset for you, but for the bank it is a liability. It is a debt that the bank owes.

The bank certainly has a pile of currency in its vault. But that's not your money LOL

And it's not enough to cover all of the bank's deposits LMFAO
 
smallfil said:
the material you are referencing both states that cash is intangible in one part of the material and at the bottom, says cash is tangible.
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I can't find anywhere in that PDF that says that cash is intangible.
 
DrBogdan said:
As per Connecticut's revenue service, it is intangible
https://portal.ct.gov/DRS/Individua...-Portal/Estate-and-Gift-Taxes/Tax-Information
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I have not read that link.

Whatever it says is a reference to the tax laws of State of Connecticut. Those laws apply to people who live or work in Connecticut, or who have property in Connecticut. And those laws are about state taxes--not US federal taxes.

The definition of what is tangible and what is intangible for purposes of Connecticut state tax laws may be completely different from the definitions that are applicable to federal tax laws.

Whatever that page says, it cannot be used to interpret federal tax law.
 
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