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Many countries apply a "deemed disposition" on your capital assets when you leave the country. That is, they "pretend" you sold and bought back your stocks and mutual funds in order to make you liable for all capital gains upon leaving the country.

Does the US have a similar rule?

It depends on what you mean by 'leaving the country.' If you mean anything other than a renunciation of citizenship, then the answer is generally no, although there are gain triggers for some transfers to foreign entities (which generally can be avoided if you agree to extend the statute of limitations for assessment of tax with respect to the transaction).

An expatriating individual who renounces his U.S. citizenship, on the other hand, is subject to tax on his U.S.-source income and gains for tax years ending within 10 years from the date of renunciation of citizenship if tax avoidance is one of the principal reasons for expatriation. The individual is also subject to estate and gift taxes during the 10-year period.

Tax avoidance is presumed to be a principal reason if during the five years preceding the renunciation of citizenship, the individual's average annual net income exceeds $100,000 or if the individual's net worth is at least $500,000. I think these amounts have been indexed for inflation for a couple of years and I don't remember off the top of my head what they are this year.

There are a lot of nuances and exceptions to these rules, so if this applies to you, see an international tax planning lawyer who specializes in this area.

Chris Riser
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