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Arielle Borsos Talks to Tax Notes on Meghan Markle's U.S. Tax Obligations

December 26, 2017, Tax Notes

When Meghan Markle walks down the aisle of St. George's Chapel at Windsor Castle next May to wed Prince Harry, she will enter a fairy tale world that few commoners, let alone an American divorcee, could ever imagine being part of. But on the darker side, Markle will also be entering a thicket of U.S. tax laws that for years has complicated the lives of Americans who married far wealthier foreigners.

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Arielle M. Borsos of Caplin & Drysdale said Markle might, over time, acquire a significant amount of foreign assets due to her marriage into the British royal family. “That could increase her U.S. tax reporting obligations,” Borsos said. “One way to avoid that is to expatriate.”

. . .

“This obligation to report gifts from foreign persons is likely to be especially relevant for Ms. Markle for the next year, as she receives engagement and wedding gifts,” Borsos said. “Gifts she receives from Prince Harry must also be included in the calculation. There is no exception for gifts between spouses.”

. . .

Markle had a leading role in “Suits” for seven years. If she were to give up her U.S. citizenship but continue to receive payments for her past work on the series, she would probably be subject to U.S. tax on the income stream if it is considered to come from a U.S. source, Borsos said. The income might, however, be subject to either a lower rate of U.S. tax or no tax at all under the tax treaty between the United States and the U.K., she added.

For the full article, please visit Tax Notes' website (subscription required).

Excerpt taken from the article "Will the IRS Crash Prince Harry’s Wedding to Meghan Markle?" by William Hoke for Tax Notes.

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