Taxation of California Fiduciaries— Effects of Residency and Sources of Income
by SHELDON RICHMAN Partner, Los Angeles Office
Prepared for Use in the California CPA Foundation's Course on Preparation of Fiduciary Income Tax Returns—September 1969
CALIFORNIA'S ABILITY to tax estates and trusts depends on jurisdic-tion over the fiduciary and the beneficiary or the sources of income, or both. Residency is often a basic consideration.
A corporate trustee is deemed a California resident if regarding the trust the corporation performs the majority of its administrative duties in California. The residency of non-corporate fiduciaries, beneficiaries and decedents will be determined under the general California income tax rules for residency. This concept of residency is somewhat subjective. Revenue and Taxation Code section 17014 treats as a resident every individual who is in California for other than temporary or transitory purposes. Similarly, California domiciliaries who are temporarily outside the state are viewed as California residents. The underlying concept is that a person is a resident of that place with which during the taxable year in question he has the closest connections. Stated another way, on the basis of objective factors, does it appear that taxpayer is more a part of the California community than of some other state? This determination
is made on a per-case basis and requires consideration of all the facts and circumstances.
Most reported decisions tend to turn on the amount of time spent by the taxpayer and his family in California. The California code and regulations contain a rebuttable presumption that physical presence for more than nine months a year constitutes residency. The converse does not necessarily follow, and the regulations provide that a person may be a California resident even if absent from the state for the entire year. In such cases, demonstrating permanent absence (as opposed to transitory
absence) from the state often involves a showing that substantially all personal ties with California have been severed. Thus, the former family home has been sold (not leased for a short term), furniture has been sold or transferred to the purported new residence (not merely stored), and there is active participation in the social community of the