At Dilendorf Law Firm, we represent foreign nationals relocating to the United States and U.S. persons preparing to expatriate — minimizing exposure to U.S. income tax, estate tax, and the federal “exit tax” through pre-residency restructuring and pre-expatriation planning.
The U.S. taxes its citizens and residents on worldwide income and worldwide estate transfers. Once an individual becomes a U.S. tax resident — by green card, by meeting the substantial presence test, or by treaty election — every asset they own, anywhere in the world, falls inside the U.S. tax system.
Going the other direction, U.S. citizens and long-term green card holders who give up that status can be subject to a federal “exit tax” under IRC § 877A that treats their worldwide assets as if sold the day before expatriation.
Both directions are planning opportunities — but only before the triggering event.
If you are relocating to the U.S., considering expatriation, or investing in the U.S. through an EB-5 or other investor visa, contact us at info@dilendorf.com or 212.457.9797 for a confidential consultation.
ATTORNEYS' EXPERIENCE
ATTORNEYS' EXPERIENCE
We design pre-immigration and pre-expatriation tax structures for high-net-worth individuals and families relocating into or out of the United States — including holders of EB-5 and other investor visas, and crypto investors with significant unrealized gains.
A non-U.S. citizen becomes a U.S. tax resident — and therefore subject to U.S. tax on worldwide income and assets — when either of two tests is met:
The green card test. Lawful permanent resident status from USCIS triggers U.S. tax residency from the first day of presence in the U.S. as a green card holder.
The substantial presence test. Physical presence of 31 days in the current year, and 183 days under the weighted three-year formula (current year + ⅓ of prior year + ⅙ of second prior year), triggers residency even without a green card.
Effective pre-immigration planning must be completed before either test is satisfied. Once residency begins, the worldwide-income and worldwide-transfer-tax systems apply.
A worked example: in 1999, a foreign national buys an apartment abroad for $100,000. In 2021, he becomes a U.S. green card holder. By 2022, the apartment is worth $1,500,000. He sells.
The gain is $1,400,000 — and because he is now a U.S. resident, that gain is taxed by the U.S. on worldwide income, even though he was not a U.S. resident when he bought the property in 1999. At combined federal and state rates of roughly 40%, he owes more than $560,000 in U.S. income tax on a transaction that had no connection to the United States at the time of purchase.
Proper pre-immigration planning — completed before the green card or substantial-presence date — could have eliminated or substantially reduced that exposure.
Pre-Immigration Planning Strategies
The right strategy depends on the client’s asset mix, family structure, source country, and timeline. Common techniques we deploy:
Step-up of basis through pre-residency sales. Recognizing capital gain on appreciated foreign assets (real estate, equities, private company shares) before the residency start date, so the U.S. taxes only post-residency appreciation.
Accelerating income and deferring deductions into the pre-residency period.
Pre-residency funding of foreign trusts for the benefit of the immigrant’s family — properly structured to fall outside the U.S. grantor-trust and throwback-tax rules.
Multi-tier corporate structuring to defer U.S. taxation on foreign operating income (e.g., the Cook Islands and Maltese structures we have used for prior clients).
Pre-residency entity restructuring — converting non-U.S. companies, untangling cross-holdings, and aligning legal title with planning objectives.
Treaty-based positions under applicable U.S. income tax treaties to claim lower withholding rates and avoid double taxation.
Estate and gift tax positioning — using the pre-residency window to make tax-efficient gifts and fund irrevocable trusts before U.S. transfer-tax exposure attaches.
EB-5 and Gold Card Investors
EB-5 investors, Gold Card visa applicants, and other investor-visa holders are the canonical pre-immigration tax planning client: the visa itself fixes the residency start date, and the investment funding decisions are made in advance.
We assist EB-5 and other investor-visa applicants with:
Source-of-funds documentation, including for crypto-funded investments that present unique evidentiary challenges before USCIS
Pre-residency structuring of the assets that will not be invested in the U.S. project — including offshore trust funding and entity restructuring
Tax optimization of the investment vehicle and the holding entities
Responses to USCIS Notices of Intent to Deny (NOIDs) where source-of-funds or lawful-source documentation is challenged
Coordination with immigration counsel so the tax structure and the visa filing are aligned
Exit Tax: IRC § 877A
U.S. citizens who renounce citizenship, and long-term residents (green card holders for at least 8 of the prior 15 tax years) who terminate residency, may be subject to the federal exit tax under IRC § 877A.
An individual is a “covered expatriate” subject to the exit tax if any of three tests is met (2025 thresholds):
Net worth test: worldwide net worth of $2 million or more on the expatriation date
Tax liability test: average annual U.S. net income tax liability of more than $206,000 for the five tax years ending before expatriation (2025; adjusted annually for inflation)
Tax compliance test: failure to certify on Form 8854 full compliance with U.S. federal tax obligations for the prior five years
If covered, the individual is treated as if all worldwide assets were sold at fair market value the day before expatriation. The first $890,000 of net gain (2025; indexed annually) is excluded; the remainder is taxed at applicable capital gains rates. Special rules apply to deferred compensation, tax-deferred retirement accounts, and beneficial interests in non-grantor trusts.
A separate gift and bequest tax under IRC § 2801 applies to U.S. recipients of gifts or bequests from covered expatriates — a consideration in any expatriation involving U.S. family members.
Pre-Expatriation Planning
Where exit-tax exposure is meaningful, the planning window closes on the expatriation date. Strategies we structure before that date include:
Net worth reduction through tax-efficient lifetime gifts to U.S. and non-U.S. beneficiaries
Asset basis management — accelerating recognition of losses, deferring recognition of gains
Retirement and deferred compensation elections (lump-sum inclusion vs. 30% withholding on future distributions)
Trust restructuring to manage exit-tax treatment of beneficial interests
Timing of expatriation relative to the inflation-adjusted thresholds and the five-year tax-liability look-back
Coordination with destination-country counsel so the post-expatriation tax position is fully understood
International Tax Planning for Cross-Border Families
Pre-immigration and exit-tax planning is part of broader international tax planning we provide to U.S. and non-U.S. clients managing assets across multiple jurisdictions:
Inbound investment structuring for foreign capital deployed into U.S. real estate, private companies, and funds (including FIRPTA planning)
Outbound structuring for U.S. clients with non-U.S. operations, investments, or family
Tax-treaty positioning and withholding-tax minimization
IRS reporting compliance for foreign trusts, foreign financial accounts, and foreign assets (Forms 3520, 3520-A, 8938, and FBAR)
Cross-border estate and gift tax planning
Why Engage Counsel Early
The single most important variable in both pre-immigration and pre-expatriation planning is timing. Strategies that work two years before the residency or expatriation date may be unavailable two weeks before.
Once the green card is issued, the substantial presence test is met, or Form 8854 is filed, the planning window closes — and the U.S. tax system applies in full.
Contact Us
If you are relocating to or from the United States, holding an EB-5 or Gold Card investor visa, or considering expatriation, contact us at info@dilendorf.com or 212.457.9797 for a confidential consultation.
The decisions you make in the months before your residency or expatriation date determine your U.S. tax exposure for years afterward.
