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Expatriation Pursuant to the Heroes Act

On May 20, 2008 and May 22, 2008, the House of Representatives and the Senate, respectively, unanimously approved H.R. 6081, the Heroes Earnings Assistance and Relief Tax Act of 2008 (the Heroes Act). On June 17, 2008, the President signed into law the Heroes Act. Section 301 of the Heroes Act added new Section 877A to the Internal Revenue Code of 1986, as amended (the Code), which effectively replaces and broadens current Code Section 877. Code Section 877A changes the taxation rules for certain US citizens that relinquish their US citizenship and certain long-term US residents who terminate their US residency after June 17, 2008 (collectively, Covered Expatriates, and the activity of relinquishing citizenship or terminating residency, Expatriating). In general, Code Section 877A provides a new mark-to-market deemed sale regime for all of the assets owned by Covered Expatriates upon Expatriation.

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