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Posted by malibu.ron@verizon.net on May 10, 2007, 11:54 pm
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My wife and I retired with a portfolio of stocks purchased
20 or more years ago. Since we live in California, I
understand that in addition to the IRS 15% capital gains tax
we must pay a 10% state tax on any sales profit.
We are considering establishing our residency in Nevada and
then selling our stock. The big question is, if we do not
like Nevada living and return to CA at a later date, can CA
bill us for the lost 10% tax.
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Posted by Seth on May 11, 2007, 6:08 pm
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> My wife and I retired with a portfolio of stocks purchased
> 20 or more years ago. Since we live in California, I
> understand that in addition to the IRS 15% capital gains tax
> we must pay a 10% state tax on any sales profit.
>
> We are considering establishing our residency in Nevada and
> then selling our stock. The big question is, if we do not
> like Nevada living and return to CA at a later date, can CA
> bill us for the lost 10% tax.
If you live in Nevada for the entire calendar year in which
you sell the stock, and have left CA completely (sold all
real estate there, gotten Nevada licenses, registered to
vote in Nevada, etc.) then the income isn't taxed by CA. If
you move to CA, they don't automatically get to collect
taxes on all the income you ever had before you moved there.
Seth
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Mark Bole on May 12, 2007, 6:47 am
Please log in for more thread options Seth wrote:
>> My wife and I retired with a portfolio of stocks purchased
>> 20 or more years ago. Since we live in California, I
>> understand that in addition to the IRS 15% capital gains tax
>> we must pay a 10% state tax on any sales profit.
>>
>> We are considering establishing our residency in Nevada and
>> then selling our stock. The big question is, if we do not
>> like Nevada living and return to CA at a later date, can CA
>> bill us for the lost 10% tax.
> If you live in Nevada for the entire calendar year in which
> you sell the stock, and have left CA completely (sold all
> real estate there, gotten Nevada licenses, registered to
> vote in Nevada, etc.) then the income isn't taxed by CA. If
> you move to CA, they don't automatically get to collect
> taxes on all the income you ever had before you moved there.
Please see the previous replies to the same question from
the same OP in this group a month ago, as well as the more
recent replies to the same question from the same OP in
misc.taxes in the last day or two. Or better yet, check the
google profile...
Being a full-year resident (entire calendar year) of Nevada
has nothing to do with it -- if they changed residency to
Nevada on one day, they could sell the stock the next day
and not be subject to CA tax. Nor does "moving" have
anything directly to do with it, that is just one of a
number of factors that determine strength of ties to one
place or another. The real question is, do they intend to
stay permanently or indefinitely in Nevada, and have they
severed all ties to California, and do their actions back it
up? If they are not yet sure they "like Nevada living", then
it sounds to me like their purpose in Nevada could be
temporary or transitory... to see how they like living
there. Therefore they would not have relinquished their CA
residency at that point.
As a practical matter, it wouldn't surprise me if the CA tax
authority is alert for this situation (gee, do you think
anyone else has ever had this idea?) and I do know they
exchange data with the IRS.
-Mark Bole
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Seth on May 14, 2007, 9:24 pm
Please log in for more thread options > The real question is, do they intend to
> stay permanently or indefinitely in Nevada, and have they
> severed all ties to California, and do their actions back it
> up? If they are not yet sure they "like Nevada living", then
> it sounds to me like their purpose in Nevada could be
> temporary or transitory... to see how they like living
> there.
Wouldn't that be "indefinite"? They have no plans to leave
Nevada, but they're aware that they might later decide to.
("I might not like that place and so might later decide to
move away" applies to just about every time anybody moves
"permanently", doesn't it?)
> Therefore they would not have relinquished their CA
> residency at that point.
If they break ties with CA and have no plans to return, I
think they have.
Seth
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Katie on May 12, 2007, 6:47 am
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> My wife and I retired with a portfolio of stocks purchased
> 20 or more years ago. Since we live in California, I
> understand that in addition to the IRS 15% capital gains tax
> we must pay a 10% state tax on any sales profit.
>
> We are considering establishing our residency in Nevada and
> then selling our stock. The big question is, if we do not
> like Nevada living and return to CA at a later date, can CA
> bill us for the lost 10% tax.
You will be nonresidents of California if you (a) abandon
your California home -- move out of it, sell up, etc.; (b)
move to and reside in Nevada -- buy or rent a home, settle
down, live there; and (c) most importantly, intend to remain
in Nevada permanently or indefinitely. If you sell your
stocks as Nevada residents, you will not owe any California
income tax on the gain.
It's that third requirement that could upset your applecart.
Actions speak louder than words. Whatever you claim your
intent to have been, if you move back to California in a
year or two, you could be held to have been absent for a
temporary purpose and to have remained California residents
during your absence.
The safe approach is to remain outside California at least
until the 4- year statute of limitations has expired on the
year in which you sold the stock.
As of now, California's highest marginal tax rate (which
applies to both ordinary income and capital gains) is 9.3%,
not 10%.
Katie in San Diego
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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