https://1040abroad.com/faq/renouncing-u-s-citizenship/#:~:te...
Should not affect most people, but if you have unrealized capital gains over ~$700k, you will be taxed as if you sold them when renouncing citizenship.
https://www.irs.gov/individuals/international-taxpayers/expa...
From there, if you are close to retirement and have your wealth in illiquid assets where a penalty for converting them to cash is steep, you are kinda fucked.
From Above link: “ IRC 877A imposes a mark-to-market regime, which generally means that all property of a covered expatriate is deemed sold for its fair market value on the day before the expatriation date. Any gain arising from the deemed sale is taken into account for the tax year of the deemed sale notwithstanding any other provisions of the Code. Any loss from the deemed sale is taken into account for the tax year of the deemed sale to the extent otherwise provided in the Code, except that the wash sale rules of IRC 1091 do not apply.
The amount that would otherwise be includible in gross income by reason of the deemed sale rule is reduced (but not to below zero) by $600,000, which amount is to be adjusted for inflation for calendar years after 2008 (the “exclusion amount”). For calendar year 2014, the exclusion amount is $680,000. For other years, refer to the Instructions for Form 8854.”