TAX ON GIFTS OF NONRESIDENTS NOT CITIZENS.

SEC. 109. TAX ON GIFTS OF NONRESIDENTS NOT CITIZENS. (a) Imposition of Tax.— Subsection (a) of section 2501 (relating to general rule for imposition of tax) is amended to read as follows: “(a) Taxable Transfers.— “(1) General rule.—For the calendar year 1955 and each calendar year thereafter a tax, computed as provided in section 2502, is hereby imposed on the transfer of property by gift during such calendar year by any individual, resident or nonresident. 80 Stat. 1575 “(2) Transfers of intangible property.—Except as provided in paragraph (3), paragraph (1) shall not apply to the transfer of intangible property by a nonresident not a citizen of the United States. “(3) Exceptions.— Paragraph (2) shall not apply in the case of a donor who at any time after March 8, 1965, and within the 10-year period ending with the date of transfer lost United States citizenship unless— “(A) such donor’s loss of United States citizenship resulted from the application of section 301(b), 350, or 355 of the Immigration and Nationality Act, as amended (8 U.S.C. 1401(b), 1482, or 1487), or “(B) such loss did not have for one of its principal purposes the avoidance of taxes under this subtitle or subtitle A. “(4) Burden of proof.—If the Secretary or his delegate establishes that it is reasonable to believe that an individual’s loss of United States citizenship would, but for paragraph (3), result in a substantial reduction for the calendar year in the taxes on the transfer of property by gift, the burden of proving that such loss of citizenship did not have for one of its principal purposes the avoidance of taxes under this subtitle or subtitle A shall be on such individual.” (b) Transfers in General.— Subsection (b) of section 2511 (relating to situs rule for stock in a corporation) is amended to read as follows: “(b) Intangible Property.— For purposes of this chapter, in the case of a nonresident not a citizen of the United States who is excepted from the application of section 2501(a)(2)— “(1) shares of stock issued by a domestic corporation, and “(2) debt obligations of— “(A) a United States person, or “(B) the United States, a State or any political subdivision thereof, or the District of Columbia, which are owned and held by such nonresident shall lie deemed to be property situated within the United States.” (c) Effective Date.— The amendments made by this section shall apply with respect to the calendar year 1967 and all calendar years thereafter.