Hastings International and Comparative Law Review


The impact of the United States' Tax Reform Act of 1986 has been significant. The Act has created a favorable tax environment that may well stimulate increased foreign investment in the United States. This Article sets out the fundamentals of the income, estate, and gift taxation of nonresident alien individuals and their estates under the Act. The Article first provides an analysis of the question of residence, as taxation varies considerably depending upon an alien's classification. 'The author further discusses the applicable tax bases, withholding requirements, and planning considerations. Finally, the author concludes that the income tax rules generally encourage portfolio investment and subject real estate investment to no more onerous burdens than those borne by United States residents, with the result that the United States could become a virtual tax haven for foreign investors.