118 STAT. 1569 PUBLIC LAW 108–357—OCT. 22, 2004 in subsections (a) and (e)(1) of section 4985 of the Internal Revenue Code of 1986, as added by this section. SEC. 803. REINSURANCE OF UNITED STATES RISKS IN FOREIGN JURIS DICTIONS. (a) IN GENERAL.—Section 845(a) (relating to allocation in case of reinsurance agreement involving tax avoidance or evasion) is amended by striking ‘‘source and character’’ and inserting ‘‘amount, source, or character’’. (b) EFFECTIVE DATE.—The amendments made by this section shall apply to any risk reinsured after the date of the enactment of this Act. SEC. 804. REVISION OF TAX RULES ON EXPATRIATION OF INDIVIDUALS. (a) EXPATRIATION TO AVOID TAX.— (1) IN GENERAL.—Subsection (a) of section 877 (relating to treatment of expatriates) is amended to read as follows: ‘‘(a) TREATMENT OF EXPATRIATES.— ‘‘(1) IN GENERAL.—Every nonresident alien individual to whom this section applies and who, within the 10 year period immediately preceding the close of the taxable year, lost United States citizenship shall be taxable for such taxable year in the manner provided in subsection (b) if the tax imposed pursu ant to such subsection (after any reduction in such tax under the last sentence of such subsection) exceeds the tax which, without regard to this section, is imposed pursuant to section 871. ‘‘(2) INDIVIDUALS SUBJECT TO THIS SECTION.—This section shall apply to any individual if— ‘‘(A) the average annual net income tax (as defined in section 38(c)(1)) of such individual for the period of 5 taxable years ending before the date of the loss of United States citizenship is greater than $124,000, ‘‘(B) the net worth of the individual as of such date is $2,000,000 or more, or ‘‘(C) such individual fails to certify under penalty of perjury that he has met the requirements of this title for the 5 preceding taxable years or fails to submit such evidence of such compliance as the Secretary may require. In the case of the loss of United States citizenship in any calendar year after 2004, such $124,000 amount shall be increased by an amount equal to such dollar amount multiplied by the cost of living adjustment determined under section 1(f)(3) for such calendar year by substituting ‘2003’ for ‘1992’ in subparagraph (B) thereof. Any increase under the preceding sentence shall be rounded to the nearest multiple of $1,000.’’. (2) REVISION OF EXCEPTIONS FROM ALTERNATIVE TAX.—Sub section (c) of section 877 (relating to tax avoidance not pre sumed in certain cases) is amended to read as follows: ‘‘(c) EXCEPTIONS.— ‘‘(1) IN GENERAL.—Subparagraphs (A) and (B) of subsection (a)(2) shall not apply to an individual described in paragraph (2) or (3). ‘‘(2) DUAL CITIZENS.— ‘‘(A) IN GENERAL.—An individual is described in this paragraph if— ‘‘(i) the individual became at birth a citizen of the United States and a citizen of another country Applicability. 26 USC 845 note.
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