Does it usually take 18 months to be presumed no longer a California resident for tax purposes?

[dtryan]

Or is it as simple as registering my vehicle and driver's license in another state while renting a room in another state since I do not have any physical property in California except my vehicle? I plan to spend only 4 months in California this year and the majority in another state.

And how do stock sales work if I hypothetically make 100k in future March 2020 while living in California but move out of state for the majority of the year? Do I pay California tax on when the stock was sold or by my state filing status?

 

[Sig]

Or is it as simple as registering my vehicle and driver's license in another state while renting a room in another state since I do not have any physical property in California except my vehicle? I plan to spend only 4 months in California this year and the majority in another state.

And how do stock sales work if I hypothetically make 100k in future March 2020 while living in California but move out of state for the majority of the year? Do I pay California tax on when the stock was sold or by my state filing status?

There are very few bright lines in state residency for tax purposes and it's generally a "have to pay the worst possible amount unless proven otherwise" situation. Also confused by the fact that the people asking these types of questions always seem to leave out some crucial facts to make it seem more to their liking. With that in mind:
1. Which 4 months are you spending in CA? If it's the last 4 months of the year, that would tend to indicate you're moving there. If it's the first 4 months, it would tend to indicate you moved away.
2. When did you generate the income and what kind is it? If you work a W-2 job your employer is required to do withholdings and UI in CA, so they know it was generated there and when. You'll owe CA taxes on that absent a couple edge cases (spouse of a military member with residency in another state, for example).
3. When you earned the stock income is a little greyer. If you earned it while living in CA (remember from above they may know exactly when you lived there) then they're going to claim it for tax purposes. Even if you didn't, if it's a futures contract they could ask you to MTM at the time you left. Probably unlikely they would initiate this out of the blue, but if you get audited for something else.....
4. Did you actually move to the other state? Renting a room on the Nevada side of South Lake Tahoe and registering your car in NV may or may not cut it. If you really have no other ties to CA, you're probably good. Forgot to tell us your wife still owns your house in LA? Completely different story.

And of course that all ignores the fact that you have to first make $100K off futures trading, at which point you'll be able to easily afford professional advice for this

 

[dtryan]

There are very few bright lines in state residency for tax purposes and it's generally a "have to pay the worst possible amount unless proven otherwise" situation. Also confused by the fact that the people asking these types of questions always seem to leave out some crucial facts to make it seem more to their liking. With that in mind:
1. Which 4 months are you spending in CA? If it's the last 4 months of the year, that would tend to indicate you're moving there. If it's the first 4 months, it would tend to indicate you moved away.
2. When did you generate the income and what kind is it? If you work a W-2 job your employer is required to do withholdings and UI in CA, so they know it was generated there and when. You'll owe CA taxes on that absent a couple edge cases (spouse of a military member with residency in another state, for example).
3. When you earned the stock income is a little greyer. If you earned it while living in CA (remember from above they may know exactly when you lived there) then they're going to claim it for tax purposes. Even if you didn't, if it's a futures contract they could ask you to MTM at the time you left. Probably unlikely they would initiate this out of the blue, but if you get audited for something else.....
4. Did you actually move to the other state? Renting a room on the Nevada side of South Lake Tahoe and registering your car in NV may or may not cut it. If you really have no other ties to CA, you're probably good. Forgot to tell us your wife still owns your house in LA? Completely different story.

And of course that all ignores the fact that you have to first make $100K off futures trading, at which point you'll be able to easily afford professional advice for this

Thanks! Going to move out after April tax deadline so only first 4 months in CA.

I'm wondering more how state trade taxes are determined though. Will it be based of settlement or sell date on the day I leave CA? I'm afraid it might get complicated since I place about 200 daytrades a day

 

[Cisco34]

I'm leaving CA at end of September, cutting all ties, and moving to Nevada at end of September. I was planning on harvesting losses so my broker statement will show zero year to date income on my September statement. I am paying cash for a house in Nevada so I would need to cash out stock eventually, but definitely after I'm a Nevada resident. Is everything clean like that or should I wait until 2021 just to be clear of any long reaching CA Tax Franchise arms. I would carry the cost of the house on a margin loan or short sale (for a week if someone tells me here that's all I need, or for 3 months if no one answers)

 

[Sig]

I'm leaving CA at end of September, cutting all ties, and moving to Nevada at end of September. I was planning on harvesting losses so my broker statement will show zero year to date income on my September statement. I am paying cash for a house in Nevada so I would need to cash out stock eventually, but definitely after I'm a Nevada resident. Is everything clean like that or should I wait until 2021 just to be clear of any long reaching CA Tax Franchise arms. I would carry the cost of the house on a margin loan or short sale (for a week if someone tells me here that's all I need, or for 3 months if no one answers)

Are you concerned about your personal tax or your corporation's tax? Because you're usually talking corporations when you say franchise tax, even though I know it is called the Franchise Tax Board. And that tax isn't based on where you live. There's a minimum franchise tax just for the privilege of having a CA corp and you'd have to apportion your income based on where it was earned to determine how much additional franchise tax you might owe.

For personal income tax, you have to apportion your income based on your moving date. So if you sell before you move those losses would flow to your CA personal income tax and any gains you had after you moved would flow to your Nevada (non-existent) personal income tax. There's no magic about waiting until Jan 1st, in fact the fact that you bought a house in Nevada would be strong evidence that you'd changed your residence to Nevada if CA insisted you demonstrate that fact. Just make sure you don't still own a house in CA or have any ties there after your move date. Unfortunately in this situation the onus is on you to prove you aren't a CA resident (which seems pretty unfair I know), and there isn't really a bright line test (even more unfair), but you'll definitely stack the odds in your favor if you don't do anything to show you're trying to game the system by just buying a house in NV but not really living there full time, which is a common ploy especially for people with a second home in Tahoe.

 

[Cisco34]

Sig, thanks for the quick response, with the volatility in the markets this week, I feel I need to start making some moves right away. Personal, not corp. You definitely saved me margin interest or giving myself a big "short sale loan" since I won't consider waiting until 2021 now. That year will be reserved for its own large cash outs depending on new tax changes. My move is real and not a ploy, so I'll try to change doctors, dentist, health plan, vehicle registration, driver license, and have zero CA ties ASAP. Poor Cally, quite an exodus. When I gave notice, 50+ of landlord's 200+ units were vacant or gave notice. On the Vegas front, 8 bids by 3rd day on house I won. Thanks again.