Nevada residence, CA tax?

[abtlaw]

I am an attorney who will be moving to Nevada. Once I establish residence there, will I be taxed in CA on the following transactions?

1- Keogh withdrawals
2-income I earn from California courts litigation, which I handle from my Nevada office, with most of the work except appearances being done in Nevada?

Thank you

 

[HappyWanderer]

1. No. But, the state is desperately finding a way to say yes. I don't think they will be successful, but, you never know.

2. Yes.

(By the way, as an attorney, case law should be fairly easy to search on both items.)

 

[abtlaw]

Work done in NV can't be taxed

Thanks for the reply. I confirmed you are right as to #1 (Keogh), which is covered in the Revenue and Tax Code.

However, after some research, I would disagree with you on #2. In Newman v. Franchise Tax Board, 208 CA3d 972, the court ruled that the test of the "source" of income is where the services are performed. In that case, Paul Newman the actor, a Colorado resident, had a 60 day contract "on call" to do movie work in California, but he was actually only physically in California for 24 days. The court found that his income from the project was only taxable pro rata, based on the 24 days he was in CA.

I think that's pretty close!

 

[HappyWanderer]

Source income is the key. However, as you know, without the facts there are no issues and your facts were a bit light. If you are paid by hour, you may be able to allocate by invoice. However, if contingent fee or value billing you also need to look at:

Cal. Admin. Code, tit.
18, reg. 17951-5, subd. (b).

A discussion on this section regarding a director who did film editing outside of the state is in a state board of equalization decision in the appeal of Sam and Betty Spiegel 81N-1274-GO

Accordingly, based in the record presented, the
inquiry becomes what amount of the $500,000 fee should be
allocated to cervices performed in California, The
respondent's regulations provide:
If nonresident employees are employed in this
State at intervals throughout the year . . .
and are paid on a daily, weekly, or monthly
basis, the gross income from sources within
this State includes that portion of the total
compensation for personal services which the
total number of working days employed within
the State bears to the total number of working
days both within and,without the State.
(Cal. Admin. Code, tit. 18, reg. 17951-5, subd. (b).)
However, that regulation provides that if the
employee is paid on some other basis:[T]he total compensation for personal services
must be apportioned between this State and other
States and foreign countries in such a manner
as to allocate to California that portion of
the total compensation which is reasonably
attributable to personal services performed in
this State.
(Cal. Admin. Code, tit. 18, reg. 17951-5, subd. (b)..)
Since we have found that, based on the record
presented, any activity regarding the picture by appel-
lant after May 15, 1975, is as important as any other
activity, we find that a "reasonable attribution" of
services performed in this State, can be made based on
total number of working days employed within and withoutthis State. Moreover, since the total fee of $500,000
covered two years, we find that a reasonable attribution
would encompass the entire period.

So, I think it depends on how things are billed and handled and all the other facts and circumstances involved.