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Residency
(Nobel v. Franchise Tax Board)

Residency-Domicile-Transition
(Nobel v. Franchise Tax Board)

C.        Appellants Were Residents of California

            Appellants’ position appears to be that by March 1, 1994, they intended to move to Colorado and the “transition” of their move to Colorado had “progressed far enough” by March 1, 1994 so that their California residency had ended, and their presence in California had become for a “‘temporary or transitory’ purpose.”  Thus, they argue, as “nonresidents” (§ 17015 [“‘Nonresident’ means every individual other than a resident”]), they can only be taxed on income from sources within California (§ 17951) and not on the sale of securities in March of 1994.

            Appellants do not contend that they actually moved to Colorado by March of 1994.  A resident’s intent to move unsupported by physical acts is not the determinative factor as to whether a taxpayer has changed his or her residence or domicile for tax purposes.  Physical presence in the state has been “a factor of greater significance than the mental intent or outward formalities of ties to another state.”  (Whittell, supra, 231 Cal.App.2d at p. 285.)  To the extent residence and domicile depend upon intent, “that intention is to be gathered from one’s acts.”  (Chapman v. Superior Court (1958) 162 Cal.App.2d 421, 426; see Hellerstein & Hellerstein, State Taxation (3d ed. 2003) Personal Income Taxes, ¶ 20.03, p. 20-15 [“The cases addressing the question of whether a taxpayer is domiciled in the state are legion, and they generally focus on the objective indicia of the taxpayer’s subjective intention to make a particular state his or her home”].)

            Courts have defined residency and domicile under statutes other than the California income tax statute.  Such definitions are relevant because “‘we do not construe statutes in isolation, but rather read every statute “with reference to the entire scheme of law of which it is a part so that the whole may be harmonized and retain effectiveness.”’”  (Peracchi v. Superior Court (2003) 30 Cal.4th 1245, 1253.)  Thus, under the Government Code, a change in residence or domicile requires a “union of act and intent” (Gov. Code, § 244, subd. (f); Chambers v. Hathaway (1921) 187 Cal. 104 [under former Pol. Code, § 52, subd. 7]), and in that connection, when “‘a person actually removes to another place with an intention of remaining there for an indefinite time, and as a place of present domicile, it becomes his place of residence or domicile . . . .’”  (Estate of Weed (1898) 120 Cal. 634, 639 [under former Pol. Code, § 52].) “A domicile once acquired is presumed to continue until it is shown to have been changed, and to constitute the new domicile two things are indispensable:  First, residence in the new locality; and second, the intention to remain there.  [Citations.]”  (Murphy v. Travelers Ins. Co. (1949) 92 Cal.App.2d 582, 587.)  Referring to the Government Code, one court stated, “Thus our courts have held that two elements are indispensable to accomplishing a change of domicile:  actual residence in the new locality plus the intent to remain there.”  (DeMiglio v. Mashore (1992) 4 Cal.App.4th 1260, 1268, italics added.)

            If one is a resident of the state, that person cannot be in the state for “a temporary or transitory purpose” until that person’s acts as well as his or her intent show that he or she has moved out of the state.  That one may intend to move from California at some time in the future does not make that person someone who is in California for a temporary or transitory purpose.  If it did, every person who contemplates plans for a future move would not be taxable as a resident.  One is a resident for tax purposes until there are sufficient indicia of an actual change of such residence.

            The purpose of the definition of “resident” under section 17014 “is to include in the category of individuals who are taxable upon their entire net income, regardless of whether derived from sources within or without the State, all individuals who are physically present in this State enjoying the benefit and protection of its laws and government, except individuals who are here temporarily . . . .”  (Cal. Code Regs., tit. 18, § 17014; see Whittell, supra, 231 Cal.App.3d at p. 285 [purpose of section 17014 is “to insure that all those who are in California for other than a temporary or transitory purpose enjoying the benefits and protections of the state, should in return contribute to the support of the state”]; Peringer v. Franchise Tax Board (1980) 105 Cal.App.3d 514, 517-518 [“he has continued for now some 23 years to live and work in this state, enjoying its benefits and protection and must respond in tax terms accordingly”].)

            The uncontradicted facts establish that no matter what their intention for the future, as of March 1994, appellants had not relinquished either their residence in California, as defined by section 17014, or California domicile, which can be an element of residence under section 17014.  (§ 17014, subd. (a)(2).)  They may have intended to move to Colorado, but they continued to reside in California until after March 1994—i.e., until they moved to Colorado and had “actual residence” there.  (DeMiglio v. Mashore, supra, 4 Cal.App.4th at p. 1268.)  That they considered themselves in “transition” has no legal significance.

            Appellants were not in California for a “temporary or transitory purpose” because they had not yet relocated to Colorado, even though they may have intended to do so.  During March of 1994, they continued to reside in their California home, which home they did not list for sale until June 1994; they continued the registration of their vehicles in California; they continued their California drivers’ licenses; Homer continued his membership in a California club; Homer continued to lease a business office in California; invoices for their cellular phones and credit cards were sent to them in California; they maintained a post office box in California; they maintained their primary personal checking account and other checking accounts in California, and the statements were sent to their California residence; California payees of their checks exceeded Colorado payees of their checks; they maintained a safe deposit box in California; the mailing address of Homer’s brokerage account was Homer’s California business address; they paid significant amounts for medical and dental care rendered in California; and they spent no time in Colorado during March of 1994.

            These overwhelming facts of California contacts demonstrate that appellants were, during March of 1994, “physically present in this State enjoying the benefit and protection of its laws and government . . . .”  (Cal. Code Regs., tit. 18, § 17014.)  There were not sufficient indicia that appellants’ residence in California for purposes of the income tax ended.  Thus, appellants were residents of California during March of 1994 under section 17014 and therefore subject to taxation on their taxable income derived from the sale of securities on March 7, 1994 and March 25, 1994.

DISPOSITION

            The judgment of the trial court is affirmed.  Respondent is entitled to its costs.

Noble v. Franchise Tax Board B167881Filed 5/11/04
 

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See facts Nobles contended showed change of residcey

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