Exit tax · asset treatment

U.S. exit tax: mark-to-market and special assets

By Danilson Ramos · Founder, Atamatax

Tax review partner: onboarding in progress. This article has not yet been independently reviewed by a credentialed professional — every figure cites its IRS source so you can verify it directly.

Direct answer

IRC §877A generally treats most property of a covered expatriate as sold for fair market value on the day before expatriation. For 2026, net gain otherwise included is reduced, but not below zero, by $910,000. Eligible and ineligible deferred compensation, specified tax-deferred accounts, and nongrantor trusts follow separate rules instead of the general deemed-sale calculation.

What to know

The 2026 mark-to-market exclusion is $910,000.
The exclusion reduces aggregate net gain; it is not a per-asset exemption.
Deferred compensation, specified tax-deferred accounts, and nongrantor trusts have special regimes.
Atamatax does not currently generate a complete exit-tax amount.

The general deemed sale

Property within the general rule is valued as though sold on the day before expatriation. Basis, fair market value, loss limitations, ownership, and exceptions must be established asset by asset. A net-worth estimate is not enough to compute the tax.

Assets outside the general rule

• Eligible deferred compensation can involve withholding and a treaty-benefit waiver with Form W-8CE timing.
• Ineligible deferred compensation can be treated as distributed at present value.
• Specified tax-deferred accounts can be treated as distributed immediately before expatriation.
• Nongrantor trust interests are subject to a separate withholding regime unless a permitted election and ruling apply.

Why pensions need classification

A foreign pension label does not decide its U.S. classification. Plan terms, treaty provisions, account rights, and the payor can change the analysis, so the diagnostic routes pensions and deferred arrangements for review.

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See potential gaps and review triggers first. The result does not decide citizenship eligibility or calculate exit tax.

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Questions

Can I subtract $910,000 from net worth?

No. The 2026 amount reduces net gain otherwise included under the mark-to-market rule, not net worth.

Does every asset use mark-to-market?

No. IRC §877A provides special rules for several categories.

Primary sources

Rules checked September 7, 2026. Use the form and instructions for the actual expatriation year.