§ 17014. Who Are Residents and Nonresidents.

(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.