## Facts

- Barkat A. Khan was a citizen of Pakistan who inherited significant U.S.-based farming and business interests from his father and other family members.
- Khan first came to the United States in 1971 on a temporary visa and remained until 1974, then returned to Pakistan.
- After returning to Pakistan, Khan sought to obtain permission to reside permanently in the United States and obtained an immigrant visa in 1984.
- In 1985, Khan moved to the United States and, according to the estate, established a domicile in California.
- In 1986, Khan returned to Pakistan to visit his family and obtained a reentry permit before departing.
- Khan did not return to the United States after leaving in 1986 and lived in Pakistan until his death.
- Khan died in Pakistan in 1991.
- The Estate of Khan filed a federal estate tax return treating Khan as a U.S. resident (resident noncitizen) and claimed the unified credit available to resident decedents (reported as $192,800).
- The Commissioner determined an estate tax deficiency of $179,278, asserting Khan was a nonresident alien at death and therefore entitled only to the limited credit applicable to nonresident alien estates.
- The estate petitioned the United States Tax Court, disputing the deficiency and arguing that Khan was domiciled in the United States when he died.

## Issues

1. Whether Barkat A. Khan was a resident of the United States for federal estate tax purposes at the time of his death in 1991 (i.e., whether he was domiciled in the United States).

## Decision

- The Tax Court held that Khan was not domiciled in the United States at the time of his death.
- The court treated Khan as a nonresident alien for federal estate tax purposes, limiting the estate to the nonresident alien credit.
- The court sustained the Commissioner’s deficiency determination of $179,278 and entered decision for the Commissioner.

## Legal Principles

- For federal estate tax purposes, “residence” means domicile.
- Domicile requires both (1) physical presence in a place and (2) an intent to remain there indefinitely (to make it one’s fixed and permanent home).
- A person’s stated intent is evaluated against objective facts and conduct, including where the person actually lived and where family and personal ties were centered.
- Lawful permanent resident status and a reentry permit are evidence bearing on intent, but neither is conclusive on the domicile question.
- Once established, a domicile continues until it is abandoned and another domicile is acquired; extended residence elsewhere and failure to return can support a finding that U.S. domicile did not exist at death.
- The Commissioner’s deficiency determination is presumed correct, and the taxpayer bears the burden of proving U.S. domicile when disputing nonresident alien treatment.

## Conclusion

Because Khan left the United States in 1986, never returned, and lived continuously in Pakistan until his death in 1991, the Tax Court found the estate had not shown that Khan intended to make the United States his permanent home at death; accordingly, Khan was treated as a nonresident alien for estate tax purposes, the estate was limited to the smaller nonresident alien credit, and the $179,278 deficiency was sustained.


Estate of Khan v. Commissioner, 75 T.C.M. 1597 (1998)