As California taxpayers leave the state in droves, so too does the FTB review subsequent income activities to ensure the taxpayers have really left the state. The Bracamontes learned this hard truth recently when the California Office of Tax Appeals (OTA) issued its pending precedential Opinion finding that the Bracamontes were merely in the process of moving when the taxing event occurred; they had not actually left our fine state.
The Bracamontes probably felt they did everything right, renting a short-term apartment while looking for a permanent home to buy, registering vehicles, changing their driver’s licenses and voter registration. They even had a doctor visit or two, serviced a car, and changed their mailing address to Nevada. But what they didn’t do was key. They spent a lot of time in California following their “move,” they left most of their personal belongings in California, and during the relevant period of time which was a mere 143 days, they spent 90 days in California, and only 28 days in their new income-tax-free-state of Nevada, and 25 days elsewhere.
Had the Bracamontes understood the significance of the remaining connections to California, they may have gladly rented a storage pod and shipped their personal belongings to Nevada, but in the end, the factual findings make clear that the Bracamontes were in the process of changing their state of residency; they did not move when the taxing sale of their business occurred.
Changes to residency can have important tax consequences – call our office for help on your residential tax matters.
