California Code of Regulations › Title 18 - Public Revenues › Division 3 - Franchise Tax Board › Chapter 2.5 - Personal Income Tax (Taxable Years Beginning After 12-31-54) › Subchapter 1 - General Provisions and Definitions › Section 17014 - Who Are Residents and Nonresidents

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The term "resident," as defined in the law, includes (1)
					 every individual who is in the State for other than a temporary or transitory
					 purpose, and (2) every individual who is domiciled in the State who is outside
					 the State for a temporary or transitory purpose. All other individuals are
					 nonresidents.
Under this definition, an individual may be a resident
					 although not domiciled in this State, and, conversely, may be domiciled in this
					 State without being a resident. The purpose of this definition 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, and to exclude from this category all individuals who, although
					 domiciled in this State, are outside this State for other than temporary or
					 transitory purposes, and, hence, do not obtain the benefits accorded by the
					 laws and Government of this State.
If an individual acquires the status of a resident by
					 virtue of being physically present in the State for other than temporary or
					 transitory purposes, he remains a resident even though temporarily absent from
					 the State. If, however, he leaves the State for other than temporary or
					 transitory purposes, he thereupon ceases to be a resident.
If an individual is domiciled in this State, he remains a
					 resident unless he is outside of this State for other than temporary or
					 transitory purposes.
(b) Meaning of
				  Temporary or Transitory Purpose. Whether or not the purpose for which an
				  individual is in this State will be considered temporary or transitory in
				  character will depend to a large extent upon the facts and circumstances of
				  each particular case. It can be stated generally, however, that if an
				  individual is simply passing through this State on his way to another state or
				  country, or is here for a brief rest or vacation, or to complete a particular
				  transaction, or perform a particular contract, or fulfill a particular
				  engagement, which will require his presence in this State for but a short
				  period, he is in this State for temporary or transitory purposes, and will not
				  be a resident by virtue of his presence here.
If, however, an individual is in this State to improve his
					 health and his illness is of such a character as to require a relatively long
					 or indefinite period to recuperate, or he is here for business purposes which
					 will require a long or indefinite period to accomplish, or is employed in a
					 position that may last permanently or indefinitely, or has retired from
					 business and moved to California with no definite intention of leaving shortly
					 thereafter, he is in the State for other than temporary or transitory purposes,
					 and, accordingly, is a resident taxable upon his entire net income even though
					 he may retain his domicile in some other state or country.
Example (1): X is domiciled in Quebec, where he had lived
					 for 50 years and had accumulated a large fortune. However, X's doctor ordered
					 him to California where he now spends his entire time, except for yearly summer
					 trips of about three or four months duration to Quebec. X maintains an abode in
					 California and still maintains, and occupies on his visits there, his old abode
					 in Quebec. Notwithstanding his domicile in Quebec, because his yearly sojourn
					 in California is not temporary or transitory he is a resident of California,
					 and is taxable on his entire net income.
Example (2): Until the fall of 1955, Y admitted domicile in
					 California. At that time, however, to avoid the California income tax, Y
					 declared himself to be domiciled in Nevada, where he had a summer home. Y moved
					 his bank accounts to banks in that state, and each year thereafter spent about
					 three or four months in that state. He continued to spend six or seven months
					 of each year at his estate in California, which he continued to maintain, and
					 continued his social, club and business connections in California. The months
					 not spent in Nevada or California he spent traveling in other states or
					 countries. Y is a resident of California and is taxable on his entire income,
					 for his sojourns in this State are not for temporary or transitory
					 purposes.
NOTE: If, in the foregoing two examples, the facts are
					 reversed so that California is the State of domicile and the other states or
					 countries are those in which the person is present for the indicated periods
					 and purposes, X and Y are not residents of California within the meaning of the
					 law because they are absent from the State for other than temporary or
					 transitory purposes.
Example (3): B and C, husband and wife, domiciled in
					 Minnesota where they maintained their family home, come to California each
					 November and stay here until the middle of March. Originally they rented an
					 apartment or house for the duration of their stay here but three years ago they
					 purchased a house here. The house is either rented or put in the charge of a
					 caretaker from March to November. B has retired from active control of his
					 Minnesota business but still keeps office space and nominal authority in it. He
					 belongs to clubs in Minnesota, but to none in California. He has no business
					 interests in California. C has little social life in California, more in
					 Minnesota, and has no relatives in California. Neither B nor C is a resident of
					 California. The connection of each to the state of domicile in each year is
					 closer than it is to California. Their presence here is for a temporary or
					 transitory purpose.
NOTE: If, in the foregoing example, the facts are reversed
					 so that California is the state of domicile and the persons are visitors in
					 another state or country, the persons are residents of California.
The underlying theory of Sections
					 17014-17016 is that the state with
					 which a person has the closest connection during the taxable year is the state
					 of his residence.
An individual whose presence in California does not exceed
					 an aggregate of six months within the taxable year and who is domiciled without
					 the state and maintains a permanent abode at the place of his domicile, will be
					 considered as being in this state for temporary or transitory purposes
					 providing he does not engage in any activity or conduct within this State other
					 than that of a seasonal visitor, tourist or guest.
An individual may be a seasonal visitor, tourist or guest
					 even though he owns or maintains an abode in California or has a bank account
					 here for the purpose of paying personal expenses or joins local social
					 clubs.
(c) Meaning of
				  Domicile. Domicile has been defined as the place where an individual has his
				  true, fixed, permanent home and principal establishment, and to which place he
				  has, whenever he is absent, the intention of returning. It is the place in
				  which a man has voluntarily fixed the habitation of himself and family, not for
				  a mere special or limited purpose, but with the present intention of making a
				  permanent home, until some unexpected event shall occur to induce him to adopt
				  some other permanent home. Another definition of "domicile" consistent with the
				  above is the place where an individual has fixed his habitation and has a
				  permanent residence without any present intention of permanently removing
				  therefrom.
An individual can at any one time have but one domicile. If
					 an individual has acquired a domicile at one place, he retains that domicile
					 until he acquires another elsewhere. Thus, if an individual, who has acquired a
					 domicile in Illinois, for example, comes to California for a rest or vacation
					 or on business or for some other purpose, but intends to either return to
					 Illinois or to go elsewhere as soon as his stay in California is completed, he
					 retains his domicile in Illinois and does not acquire a domicile in California,
					 even though he maintains a home here, has his family with him, and remains here
					 a considerable period of time. Likewise, an individual, who is domiciled in
					 California and who leaves the State retains his California domicile as long as
					 he has the definite intention of returning here regardless of the length of
					 time or the reasons why he is absent from the State.
On the other hand, an individual, domiciled in Illinois,
					 who comes to California with the intention of remaining here indefinitely, and
					 who has no fixed intention of returning to Illinois, loses his Illinois
					 domicile and acquires a California domicile the moment he enters the State.
					 Similarly, an individual domiciled in California, who leaves the State, loses
					 his California domicile the moment he abandons any intention of returning to
					 California and locates elsewhere with the intention of remaining there
					 indefinitely.
(d) Proof of
				  Nonresidence.
(1) The type and amount of
				  proof that will be required in all cases to rebut or overcome a presumption of
				  residence and to establish that an individual is a nonresident cannot be
				  specified by a general regulation, but will depend largely on the circumstances
				  of each particular case.
Ordinarily, however, affidavits or testimony of an
					 individual and of his friends, employer, or business associates that the
					 individual was in California for a rest or vacation to complete a particular
					 business transaction, or to work for a limited period of time will be
					 sufficient to overcome any presumption of residence here. In the case of
					 individuals who claim to be nonresidents by virtue of being outside the State
					 for other than temporary or transitory purposes, affidavits of friends and
					 business associates as to the reasons for being outside the State should be
					 submitted.
Affidavits that an individual votes in or files income tax
					 returns as a resident of some other state or country, although relevant in
					 determining one's domicile, are otherwise of little value in determining one's
					 residence. No weight shall be given to the fact that charitable contributions
					 are made to charities either within or without the State.
(2) If an individual is presumed to be a
				  resident during any taxable year or if any question as to his resident status
				  exists, he should file a return, in order to avoid the possibility of the
				  imposition of penalties, for that year even though he believes he was a
				  nonresident and even though he received no income from sources within this
				  State. If he received income from sources within this State, that income should
				  be reported. If no income was received from sources within this State, that
				  fact should be stated on the return.
The return should be accompanied by a signed statement
					 setting forth in detail the reasons why the individual believes he was a
					 nonresident. The return should also be accompanied by any evidence such as
					 certificates, affidavits, etc., that the individual is able to obtain showing
					 that he was not a resident.
If the Franchise Tax Board is satisfied from the statement
					 and evidence submitted that the individual was a nonresident, the tax will be
					 computed only upon the income, if any, from sources within this State. If the
					 Franchise Tax Board is not satisfied that the individual was a nonresident, it
					 will either request additional information or require the individual to file a
					 return as a resident.
In any event, the individual will have the opportunity
					 before his status as a resident or nonresident is finally determined to submit
					 additional evidence either in writing or at an oral hearing before the
					 Franchise Tax Board or its representatives.