12 2 STA T . 1 64 2 PUBLIC LA W 11 0– 24 5—J U NE 1 7, 200 8other th an an y arran g e m ent d e sc r ib edins u bsection (k) or ( p )o f section 408, a q ua l ified tuition program (as defined in section 529 ),a C o v erdell education savings account (as defined in section 5 3 0), a health savings account (as defined in section 223), and an A rcher MS A (as defined in section 220) .‘ ‘(f) S PECIALRU LE SFORN O NG RAN T OR T RUSTS. — ‘‘( 1 ) I N GENERAL.—In the case of a distribution (directly or indirectly) of any property from a nongrantor trust to a covered e x patriate— ‘‘(A) the trustee shall deduct and w ithhold from such distribution an amount equal to 30 percent of the taxable portion of the distribution, and ‘‘( B ) if the fair market value of such property exceeds its ad j usted basis in the hands of the trust, gain shall be recogni z ed to the trust as if such property were sold to the expatriate at its fair market value. ‘‘(2) TA X A B LE PORTION.— F or purposes of this subsection, the term ‘taxable portion ’ means, with respect to any distribu - tion, that portion of the distribution which would be includible in the gross income of the covered expatriate if such expatriate continued to be subject to tax as a citizen or resident of the U nited States. ‘‘(3) NONGRANTOR TRUST.—For purposes of this subsection, the term ‘nongrantor trust’ means the portion of any trust that the individual is not considered the owner of under subpart E of part I of subchapter J . The determination under the preceding sentence shall be made immediately before the expatriation date. ‘‘(4) SPECIAL RULES RELATING TO W IT H HOL D ING.—For pur- poses of this subsection— ‘‘(A) rules similar to the rules of subsection (d)( 6 ) shall apply, and ‘‘(B) the covered expatriate shall be treated as having waived any right to claim any reduction under any treaty with the United States in withholding on any distribution to which paragraph (1)(A) applies unless the covered expa- triate agrees to such other treatment as the Secretary determines appropriate. ‘‘(5) APPLICATION.—This subsection shall apply to a non- grantor trust only if the covered expatriate was a beneficiary of the trust on the day before the expatriation date. ‘‘(g) D EFINITIONS AND SPECIAL RULES RELATING TO EXPATRIA- TION.—For purposes of this section— ‘‘(1) CO V ERED EXPATRIATE.— ‘‘(A) IN GENERAL.—The term ‘covered expatriate’ means an expatriate who meets the requirements of subparagraph (A), (B), or (C) of section 8 7 7(a)(2). ‘‘(B) EXCEPTIONS.—An individual shall not be treated as meeting the requirements of subparagraph (A) or (B) of section 877(a)(2) if— ‘‘(i) the individual— ‘‘(I) became at birth a citizen of the United States and a citizen of another country and, as of the expatriation date, continues to be a citizen of, and is taxed as a resident of, such other country, and Ap p licab ili ty.
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