Brown & Streza Blog
By David Keligian on 7/12/2016 9:34 AM
In my previous articles on avoiding California residency, we saw that residency questions are ultimately decided by establishing the state with which someone has the "closest connection" during a tax year. It was noted that relying on presumptions and mechanical tests (including the 29 factor test listed in the Corbett case) will not necessarily win the day.

As pointed out in the prior articles, certainly someone who wishes to avoid California residency should align and document as many favorable objective (Corbett) factors as they possibly can. But if the stakes are high (such as leaving California in advance of a major stock sale), an understanding of the practicalities of a Franchise Tax Board ("FTB") challenge is important.

For example, I'm frequently asked "how long do I have to stay out of California after the sale?" The practical answer is "at least 4 years". That is because, assuming a California tax return is filed for the year of the sale, that return may not be selected for audit for...