5 ms·

Isn't the actual listed location of residence more a formality for a billionaire like Musk? I presume he'll still rent residences in LA and the Bay Area conside

by jowday 6y ago

Isn't the actual listed location of residence more a formality for a billionaire like Musk? I presume he'll still rent residences in LA and the Bay Area considering he'll be back and forth for business related to Tesla and SpaceX. This seems like he's renting a place in Texas and making a big deal out of 'moving there' to make a point about California's regulatory environment.

cumwolf 6y ago
Yeah I think this is just a ruse for attention but what do i know
- deleted 6y ago
  [deleted]
- RoyTyrell 6y ago
  That's everything with him. When he's out of the spotlight for too long he invents something to make himself relevant again.
ashtonkem 6y ago
I have no direct experience in this, but an acquaintance of ours whose startup exited successfully is similarly leaving CA for tax reasons. My light understanding is that CA has some pretty tight rules around how often you can work in CA before you automatically become a resident for the purposes of taxes. If they find out that you’ve worked in CA too much I presume they’ll try and tax your yearly income.
- SEJeff 6y ago
  NY has been doing this for decades.
- bonestamp2 6y ago
  Yes, actually every state (and most countries) have a similar law. Some people who live and work across state lines deal with this every year on their taxes. I worked part of one year in two different countries, same thing.
  - ashtonkem 6y ago
    Another commenter clarified what I was trying to say; if you become a part time resident of CA then all of your income gets taxed, not just the stuff you earned in CA.
- tidepod12 6y ago
  The distinction CA (and other states) make is between being a "resident", "part-time resident", or "nonresident". If you are classified as a resident or a part-time resident, you pay CA income tax on all of your income, even if it was earned from work that happened outside of CA. If you are a nonresident, you pay CA taxes only on the income that was earned from work happening in CA. It's possible this move might help Musk become a "nonresident" and pay less CA taxes, but I kinda doubt it. The classification of type of resident is based on more than just "official address of your house". It also includes things like where your work is, what banks you use, what doctors you go to, and even what social activities you take part in. This is pretty common in many states, btw. One time I had to file a tax return to a small city in Michigan because I had a 4-hour work meeting there and they taxed it.
  - readams 6y ago
    This is why he sold all his properties. He undoubtedly has good tax attorneys and is doing everything required to be a nonresident. I wouldn't be that surprised if he decided to just never set foot in California again.
venatiodecorus 6y ago
i'd doubt he's renting...
- jowday 6y ago
  I only say renting because he made a big deal of selling all of his property a while back.
ericmay 6y ago
I'm surprised he doesn't do #vanlife out of his private jet.
boringg 6y ago
Tax requirement in CA doesn't allow for that. You can't own and live most of your time outside of CA to strictly avoid paying state taxes. This is multifold but I think a lot of it is to prevent people just buying up all the housing stock and putting pressure on the market as well as the state needing to make money since we have prop 13 challenges. https://www.ftb.ca.gov/file/personal/residency-status/part-year-and-nonresident.html https://www.ftb.ca.gov/file/personal/residency-status/part-y...
cltby 6y ago
The CA Franchise Tax Board aggressively pursues departing taxpayers who maintain even slight residual connections to the state. There are no bright-line rules to determine residency, so the state has great leeway (and incentive) to pursue punishing residency audits. Horror stories abound!
menssen 6y ago
Finance YouTuber Graham Stephen recently made a big deal out of moving from Los Angeles to Vegas because the tax savings more-or-less paid for a giant mansion in Vegas. (And because of some slightly cringey comments about not wanting to see so many homeless people, but that's not the editorial comment I'm trying to make right now.) But, he's keeping his house in CA (for "weekends and vacations"), and he's building his studio in Vegas to be an exact replica of the old one. So, yeah, charitably, "moving" for the highly wealthy does not really look anything like "moving" for anybody else. Less charitably, it seems like a scam. In GS' case, nobody can tell where he's doing his work from, so "oh we spent too long at the beach on this 'vacation day,'" better stay here and film tomorrow's episode from CA, nobody will ever know." In EM's case, I suspect he spends more time business-traveling than at home anyway, so it would be pretty difficult to prove which of his houses he "lives" in. And if anybody balks, there's a huge amount of PR content proving that they "moved." This wouldn't bug me so much if it weren't for the arrogant, selfish, hubristic political comments they always make on the way out.
- gok 6y ago
  The California Franchise Tax Board actually spends a lot resources catching people who spend too much time in state and don't claim to live there. It's actually surprisingly hard for would-be tax dodgers to pull off, and the penalties are severe.
  - hguant 6y ago
    This reminds me of the lengths Ernest Hemmingway went to avoid paying taxes - he kept meticulous diaries, in part because that's who he was, but also to prove to the US and Cuban authorities that he didn't live in their respective jurisdictions long enough to be taxed at <whatever rate>. Of course, the Castro government seized his assets in Cuba come the revolution, so I don't think it worked out for him in the long run, financially speaking.
  - ffggvv 6y ago
    not sure if they do this but seems pretty easy to see just by looking at electricity usage
ffggvv 6y ago
if that was the case him and every other billionaire would’ve done it years ago
deleted 6y ago
[deleted]
csomar 6y ago
I'm guessing HNWI will have a much stricter inspection of where they did actually live than your average citizen.
hobofan 6y ago
Are US tax agencies that easily fooled? From what I know in Europe, you generally have to pay tax in the place where you reside more than 50% of the year (additional taxes may apply for secondary residences, but that's very regional). It's fairly common for a tax agency of one country to demand proof that you actually moved and physically reside in another country so that they don't double-tax you, so you better have documented the travels between both countries and kept as many receipts as possible.
- pdonis 6y ago
  > From what I know in Europe, you generally have to pay tax in the place where you reside more than 50% of the year What's the definition of "reside"? In the US, it's generally not just a matter of where you sleep at night or where you keep stuff; the legal definition of "residence" is a matter of intent, where you intend your permanent place of residence to be. Of course there needs to be objective evidence of your intent: you can't just say "I live in Texas" if you own a home in California which you aren't renting to anyone else, but don't own any real estate in Texas. But it looks like Musk is selling all his California property. Even if he doesn't buy a home in Texas, if he has a permanent rental of one there, but only rents places in California temporarily when he travels there for business, legally his residence would indeed be in Texas.
gnopgnip 6y ago
It is more than just a formality. To no longer be considered a CA resident for tax purposes you need to abandon your CA domicile and establish a new one. The CA franchise tax board is more aggressive at pursuing taxes owed than most states. If you spend more than half of your nights in CA, it is very likely you will be a resident for tax purposes. Presumably he will hire experts and listen to their advice, and he sold all property in CA. But lots of people get caught trying to dodge these taxes unsuccessfully.

by jowday 6y ago

cumwolf 6y ago

Yeah I think this is just a ruse for attention but what do i know

deleted 6y ago
[deleted]
RoyTyrell 6y ago
That's everything with him. When he's out of the spotlight for too long he invents something to make himself relevant again.

ashtonkem 6y ago

I have no direct experience in this, but an acquaintance of ours whose startup exited successfully is similarly leaving CA for tax reasons. My light understanding is that CA has some pretty tight rules around how often you can work in CA before you automatically become a resident for the purposes of taxes. If they find out that you’ve worked in CA too much I presume they’ll try and tax your yearly income.

SEJeff 6y ago
NY has been doing this for decades.
bonestamp2 6y ago
Yes, actually every state (and most countries) have a similar law. Some people who live and work across state lines deal with this every year on their taxes. I worked part of one year in two different countries, same thing.
- ashtonkem 6y ago
  Another commenter clarified what I was trying to say; if you become a part time resident of CA then all of your income gets taxed, not just the stuff you earned in CA.
tidepod12 6y ago
The distinction CA (and other states) make is between being a "resident", "part-time resident", or "nonresident". If you are classified as a resident or a part-time resident, you pay CA income tax on all of your income, even if it was earned from work that happened outside of CA. If you are a nonresident, you pay CA taxes only on the income that was earned from work happening in CA. It's possible this move might help Musk become a "nonresident" and pay less CA taxes, but I kinda doubt it. The classification of type of resident is based on more than just "official address of your house". It also includes things like where your work is, what banks you use, what doctors you go to, and even what social activities you take part in. This is pretty common in many states, btw. One time I had to file a tax return to a small city in Michigan because I had a 4-hour work meeting there and they taxed it.
- readams 6y ago
  This is why he sold all his properties. He undoubtedly has good tax attorneys and is doing everything required to be a nonresident. I wouldn't be that surprised if he decided to just never set foot in California again.

venatiodecorus 6y ago

i'd doubt he's renting...

jowday 6y ago
I only say renting because he made a big deal of selling all of his property a while back.

ericmay 6y ago

I'm surprised he doesn't do #vanlife out of his private jet.

boringg 6y ago

Tax requirement in CA doesn't allow for that. You can't own and live most of your time outside of CA to strictly avoid paying state taxes. This is multifold but I think a lot of it is to prevent people just buying up all the housing stock and putting pressure on the market as well as the state needing to make money since we have prop 13 challenges. https://www.ftb.ca.gov/file/personal/residency-status/part-year-and-nonresident.html https://www.ftb.ca.gov/file/personal/residency-status/part-y...

cltby 6y ago

The CA Franchise Tax Board aggressively pursues departing taxpayers who maintain even slight residual connections to the state. There are no bright-line rules to determine residency, so the state has great leeway (and incentive) to pursue punishing residency audits. Horror stories abound!

menssen 6y ago

Finance YouTuber Graham Stephen recently made a big deal out of moving from Los Angeles to Vegas because the tax savings more-or-less paid for a giant mansion in Vegas. (And because of some slightly cringey comments about not wanting to see so many homeless people, but that's not the editorial comment I'm trying to make right now.) But, he's keeping his house in CA (for "weekends and vacations"), and he's building his studio in Vegas to be an exact replica of the old one. So, yeah, charitably, "moving" for the highly wealthy does not really look anything like "moving" for anybody else. Less charitably, it seems like a scam. In GS' case, nobody can tell where he's doing his work from, so "oh we spent too long at the beach on this 'vacation day,'" better stay here and film tomorrow's episode from CA, nobody will ever know." In EM's case, I suspect he spends more time business-traveling than at home anyway, so it would be pretty difficult to prove which of his houses he "lives" in. And if anybody balks, there's a huge amount of PR content proving that they "moved." This wouldn't bug me so much if it weren't for the arrogant, selfish, hubristic political comments they always make on the way out.

gok 6y ago
The California Franchise Tax Board actually spends a lot resources catching people who spend too much time in state and don't claim to live there. It's actually surprisingly hard for would-be tax dodgers to pull off, and the penalties are severe.
- hguant 6y ago
  This reminds me of the lengths Ernest Hemmingway went to avoid paying taxes - he kept meticulous diaries, in part because that's who he was, but also to prove to the US and Cuban authorities that he didn't live in their respective jurisdictions long enough to be taxed at <whatever rate>. Of course, the Castro government seized his assets in Cuba come the revolution, so I don't think it worked out for him in the long run, financially speaking.
- ffggvv 6y ago
  not sure if they do this but seems pretty easy to see just by looking at electricity usage

ffggvv 6y ago

if that was the case him and every other billionaire would’ve done it years ago

deleted 6y ago

[deleted]

csomar 6y ago

I'm guessing HNWI will have a much stricter inspection of where they did actually live than your average citizen.

hobofan 6y ago

Are US tax agencies that easily fooled? From what I know in Europe, you generally have to pay tax in the place where you reside more than 50% of the year (additional taxes may apply for secondary residences, but that's very regional). It's fairly common for a tax agency of one country to demand proof that you actually moved and physically reside in another country so that they don't double-tax you, so you better have documented the travels between both countries and kept as many receipts as possible.

pdonis 6y ago
> From what I know in Europe, you generally have to pay tax in the place where you reside more than 50% of the year What's the definition of "reside"? In the US, it's generally not just a matter of where you sleep at night or where you keep stuff; the legal definition of "residence" is a matter of intent, where you intend your permanent place of residence to be. Of course there needs to be objective evidence of your intent: you can't just say "I live in Texas" if you own a home in California which you aren't renting to anyone else, but don't own any real estate in Texas. But it looks like Musk is selling all his California property. Even if he doesn't buy a home in Texas, if he has a permanent rental of one there, but only rents places in California temporarily when he travels there for business, legally his residence would indeed be in Texas.

gnopgnip 6y ago

It is more than just a formality. To no longer be considered a CA resident for tax purposes you need to abandon your CA domicile and establish a new one. The CA franchise tax board is more aggressive at pursuing taxes owed than most states. If you spend more than half of your nights in CA, it is very likely you will be a resident for tax purposes. Presumably he will hire experts and listen to their advice, and he sold all property in CA. But lots of people get caught trying to dodge these taxes unsuccessfully.