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Well, this point specifically applies to options. Per FTB-1004 (https://www.ftb.ca.gov/forms/misc/1004.html https://www.ftb.ca.gov/forms/misc/1004.html) you wil

Well, this point specifically applies to options. Per FTB-1004 (https://www.ftb.ca.gov/forms/misc/1004.html https://www.ftb.ca.gov/forms/misc/1004.html) you will be taxed whenever you exercise, whether you're a resident or a non-resident. Doesn't matter if you're out-of-state for a particular tax year. It is not really correct to cast this in terms of owing taxes on income in the state that you earned it because options are not income. There is a non-symmetry here with financial options generally: if you lived in California and bought some options, then left the state, and then, as a non-resident, exercised the options and sold shares, you would not be taxed in California because there was no income in California. Income on a stock transaction is generally recognized at the time a security is sold. Obtaining options and stocks both represent an outflow of money, not an inflow. It's a regressive policy to treat options purchased in-kind with labor in an unfavorable way, with regards to taxation, relative to those purchased with cash.

tempsy 6y ago
Ok but tech elite here aka VC investors aren’t getting options when they invest. So this tax question doesn’t apply to them. Rabois can move to Miami now and if he sells his IPO shares next year he owes California nothing.
- solidsnack9000 6y ago
  Well, VCs do sometimes get options -- that's what convertible debt is. Usually options are not treated as compensation, though. It is likely that Rabois has a mix of compensation from his firm, as a practical matter, and some of it is likely to be options -- but even if not, Rabois and people like him have paid a lot of taxes in California. A lot more than they would have paid in most states. When you consider how much they paid relative to how well the state government has provided services -- taking other states into consideration -- it's hard to see how the people moving are betraying anyone. They paid and paid and paid.

tempsy 6y ago

Ok but tech elite here aka VC investors aren’t getting options when they invest. So this tax question doesn’t apply to them. Rabois can move to Miami now and if he sells his IPO shares next year he owes California nothing.

solidsnack9000 6y ago
Well, VCs do sometimes get options -- that's what convertible debt is. Usually options are not treated as compensation, though. It is likely that Rabois has a mix of compensation from his firm, as a practical matter, and some of it is likely to be options -- but even if not, Rabois and people like him have paid a lot of taxes in California. A lot more than they would have paid in most states. When you consider how much they paid relative to how well the state government has provided services -- taking other states into consideration -- it's hard to see how the people moving are betraying anyone. They paid and paid and paid.