 U.S. citizen and resident alien decedents are subject to estate tax on all of their assets, wherever situated.The nonresident aliens are subject to estate tax only on that part of the gross estate which at the time of death is situated in the U.S. Another significant distinction between U.S. citizens/RAs and NRAs is in the exemptions allowed in computing the tax liability.Where differing characterizations of an item of income can result in differing tax results, it is necessary to determine the characterization.