Everyone has heard about the affluent, or even not-so-affluent, New Yorkers who have moved to Florida, or to another state,[i] to escape New York’s tax regime, not to mention the cold.

More recently, some of us are encountering New Yorkers who are looking to relocate, not to another state, but to another country.[ii]

Today we’ll consider the New Yorker who is thinking about moving overseas – in no small part because they have had their fill of paying New York taxes[iii] – but who is not willing to give up their U.S. citizenship; they want to maintain their U.S. passport to keep open the option of returning to the U.S. if future circumstances ever warrant such a move.[iv]

Our focus here will be upon New Yorkers who are also U.S. citizens; that’s because a green card holder (a lawful permanent resident) must maintain residency in the U.S. – if a permanent resident remains outside the U.S. and establishes a residence overseas, their green card may be revoked.[v]

Domicile

As you know, giving up one’s status as a New York domiciliary is no easy feat – there is much that the New Yorker has to give up achieving that goal. Moreover, the Department will audit many of these “emigres” and determine they are still domiciled in New York because, according to the Department of Taxation and Finance (the “Department”), they have failed to abandon New York as their permanent home or because they have failed to establish a new domicile elsewhere.

“Domicile” is defined as the place an individual intends to be their permanent home, the place they intend to return to whenever they may be absent.[vi] Intention is a decisive factor in the determination of whether any particular residence which a person may occupy is their domicile.

Only One. A person can have only one domicile.[vii] Domicile is not dependent on citizenship; thus, an immigrant who has permanently established such immigrant’s home in New York is domiciled here regardless of whether such immigrant has become a U.S. citizen or has applied for citizenship.[viii]

Once established, a domicile continues until the person in question abandons the old location and moves to a new location with the bona fide intention of making their fixed and permanent home at the new location.[ix]

Burden of Proof. The burden of proving a change of domicile is upon the party asserting the change[x] – almost always the taxpayer. The evidence needed to support a change of domicile must be “clear and convincing.”

Thus, a taxpayer who has been historically domiciled in New York, and who is claiming to have changed their domicile, must be able to support their intentions with unequivocal acts.

The fact that a New York domiciliary may have established significant ties in a new location may not be enough to show a change of domicile if they continue to maintain significant ties to New York.

Intent and Acts. There are two crucial elements to prove a change of domicile: (1) an actual change of residence and (2) abandonment of the former domicile and acquisition of another.[xi]

Stated differently, there must be not only an intent to make such change but also actual residence in the new location. By the same token, residence without intention to remain in the new location does not effect a change of domicile.

Since a domicile continues until superseded by another, a change of residence without the intention of creating a new domicile leaves the last established domicile unaffected.[xii]

That one’s domicile continues until a new one is established elsewhere may be true even in instances where a residence is no longer maintained in the old location.[xiii]

The fact that a change of domicile was motivated primarily by a desire to gain a tax advantage is immaterial, if the intention of the individual to acquire a new domicile is absolute and fixed and, just as importantly, their acts confirm that intention.

Primary Factors. Speaking of acts, because one’s intent would otherwise be difficult to establish, we look for objective manifestations of such intent. The Department has identified five so-called primary factors on which the Department and, therefore, taxpayers should focus in determining one’s domicile: home, active business, time spent, near and dear items, and family.

From the taxpayer’s perspective, it will be important to establish a narrative through one’ actions that leads their audience to conclude that New York is no longer the taxpayer’s home. That will require some effort.

Before claiming a new home, the taxpayer should consider each of the above factors and then take whatever action is reasonably possible (and personally acceptable) so that an analysis of the factors – individually and collectively – points toward a decision favoring domicile in another location.

The foregoing analysis should be familiar to most of you.

Moving Overseas – Other Factors

A change of domicile from New York to a foreign country, however, presents a unique set of considerations that differ from those just described. Regardless, as in the case of a move between states, the taxpayer must never forget that the government has the benefit of hindsight; the taxpayer should act accordingly.

In the case of a move overseas, a comparison of the domicile factors between New York and the foreign country may not be a true measure of the taxpayer’s intent. This is particularly true for moves that are prompted by employment, for example, rather than by retirement considerations.

For example, the factors of time and active business ties will likely favor the foreign country which, other things being equal, may cause one to conclude that the taxpayer has changed their domicile. This would not be the case, however, where the employment overseas is of a temporary nature and the individual intends to return to New York upon completion of the assignment.[xiv]

However, as indicated earlier, we’re assuming that our New Yorker is leaving the state on their own volition with the goal of establishing a home in a foreign country – they are not being assigned overseas by their employer, nor are they stationing themselves in a foreign country in order to develop business relationships from which they may benefit when they return to the U.S.

Unless our New Yorker truly intends to reside in the foreign country permanently, in most cases they will not have demonstrated a fixed intention to change their domicile by clear and convincing evidence.

Domicile Factors. This view is reflected in the Department’s regulations which state, “…a United States citizen will not ordinarily be deemed to have changed such citizen’s domicile by going to a foreign country unless it is clearly shown that such citizen intends to remain there permanently. For example, a United States citizen domiciled in New York State who goes abroad because of an assignment by such citizen’s employer or for study, research or recreation does not lose such citizen’s New York State domicile unless it is clearly shown that such citizen intends to remain abroad permanently and not to return.”[xv]

The courts have generally held that more is involved in the decision to change one’s domicile to a foreign country than to another state and, consequently, have demanded more of the taxpayer to support the asserted change. “Less evidence is required to establish a change of domicile from one state to another than from one nation to another,”[xvi] and “The presumption against a foreign domicile is stronger than the general presumption against a change of domicile.”[xvii]

In assessing a taxpayer’s intent in matters of foreign domicile, the following factors may be helpful:

a. The act of applying, and being approved, for permanent residence in a foreign country signals an intent that is lacking in taxpayers who have temporary work visas which need to be renewed periodically.

Thus, one may not have changed their domicile where they obtained only a “working visa” which was renewable annually, as opposed to an “immigration visa” which would have allowed them to reside permanently.[xviii]

On the other hand, taxpayers who obtained resident visas which allowed them to remain in the foreign country permanently should be able to demonstrate a change of domicile.

b. Because domicile is defined, in part, as the place one returns to whenever absent, the retention of a New York residence[xix] to which the taxpayer regularly returns may suggest a lack of a fixed intention to abandon their New York domicile.

In the context of foreign domicile, what is significant is not necessarily the amount of time a taxpayer spends in New York, but rather the fact that they regularly return to New York for vacations or to visit family and friends.[xx]

c. A comparison of active business ties in foreign domicile cases would not necessarily be an accurate measure of one’s intention to change domicile if the foreign assignment is of a temporary nature. This is true whether the individual is an employee or a business owner.[xxi]

In one case, it was the nature of the taxpayer’s business ties to New York that was an important factor in the Court’s decision that he had not intended to relinquish his domicile.[xxii] The taxpayer claimed a change of domicile to Canada in connection with the operation of a music partnership. While living in Toronto, the taxpayer made several trips to New York City where he “retained viable business interests which he tended to” during the year. In contrast, the taxpayer’s Canadian venture was not profitable and his “sole income for the year was from New York and Florida interests.” This and the continued maintenance of a New York City checking account convinced the Court that the taxpayer and his wife had not intended to change their domicile. The Court accorded little weight to the taxpayer’s application for “landed immigrant” status as evidence of their intention to remain in Canada by noting that they were “required, by the Canadian government, to acquire this status as a condition precedent to engaging in his planned business enterprise.”

d. The fact that a U.S. citizen who has relocated to a foreign country files tax returns as a resident of that country reporting his worldwide income is not necessarily conclusive of a change of domicile. Nevertheless, it deserves consideration as an action that it is consistent with the taxpayer’s asserted change of domicile.

In one case,[xxiii] the Court noted that during the period that the taxpayers were absent from New York they “paid Canadian income taxes.” In another,[xxiv] the State Tax Commission noted that the taxpayers “became subject to and paid taxes to West Germany” as a factor in acknowledging a change of domicile.[xxv]

Finally, it should be noted that whether or not the taxpayer acquires citizenship in the foreign country is generally of little consequence in and of itself. The Department has stated that, “domicile is not dependent on citizenship.”[xxvi]

Tax Relief for the N.Y. Domiciliary “Overseas”

Assume for a moment that our New Yorker unfortunately fails to convince the Department that they abandoned their domicile in the state and established a new domicile in a foreign country. Is all hope lost insofar as relief from New York taxes is concerned?

Not necessarily.

New York’s Tax Law and the regulations promulgated thereunder provide income tax relief for certain individuals who live overseas but who remain New York domiciliaries.[xxvii] However, because of the relatively strict requirements, such relief may be difficult to secure in many cases.

A New York domiciliary who meets the criteria for either the “Thirty Day Rule” or the “548 Day Rule” is not treated as a resident of the state for purposes of the state income tax:

Thirty Day Rule. A taxpayer will satisfy the requirements of the Thirty Day Rule with respect to a taxable year if the taxpayer:

(1) maintains no permanent place of abode in New York during the year;

(2) maintains a permanent place of abode outside New York during the entire year; and

(3) spends not more than 30 days of the taxable year in New York. The first two criteria must be satisfied for the entire taxable year; thus, for example, if the taxpayer maintained a New York City apartment for part of the year, they would not qualify for relief under this rule.[xxviii]

548-Day Rule. A taxpayer will qualify for relief under this rule if they meet the following three conditions:

(1) within any period of 548 consecutive days (approx. 1.5 years), the taxpayer is present in a foreign country or countries for at least 450 days (approx. 1.25 years);

(2) during such period of 548 consecutive days the taxpayer, the taxpayer’s spouse (unless legally separated) and the taxpayer’s minor children are not present in New York for more than 90 days; and

(3) during the nonresident, “short” (less than 12 months) portion[xxix] of the taxable year with or within which such period of 548 consecutive days begins and the nonresident portion of the taxable year with or within which such period of 548 consecutive days ends, the taxpayer is present in New York for a number of days which does not exceed an amount which bears the same ratio to 90 as the number of days contained in such portion of the taxable year bears to 548.

In determining the minimum number of days that the taxpayer must be in a foreign country, and the maximum number of days the taxpayer, spouse and minor children can be in New York, both full and part days are counted.[xxx]

As long as an individual who is domiciled in New York continues to meet the requirements of either the 30-day rule or the 548-day rule, the individual will be considered a nonresident of New York for personal income tax purposes; meaning only their New York source income will be subject to the state’s income tax.

But if the individual fails to meet these conditions, the individual will be subject to New York personal income tax as a resident; meaning they will owe New York income tax on their income from all sources (worldwide) regardless of how the income is generated, or the nature of the income.

It should go without saying that, where an individual domiciled in New York claims to be a nonresident for any taxable year or portion thereof, the burden is upon the individual to demonstrate that they satisfy the requirements set forth in either the 30-day rule or the 548-day rule.

Example of 548-Day Rule. Perhaps the best way to understand the 548-day rule is with an illustration:

  • Taxpayer is domiciled in New York. Taxpayer was present in a foreign country 463 days during the 548-day period July 2, 2020, through December 31, 2021. (Because the 548-day period begins on July 2, 2020, there is one short period: July 2, 2020, through December 31, 2020.)
  • During this same 548-day period, Taxpayer was present in New York a total of 50 days: 15 during the period July 2, 2020, through December 31, 2020, and 35 days during 2021.
  • Also, during this 548-day period, Taxpayer did not maintain a permanent place of abode in New York at which his minor children were present for more than 90 days.
  • Since Taxpayer was present in a foreign country for 463 days during a period of 548 consecutive days, Taxpayer meets the first requirement of the 548-day rule.
  • Taxpayer also meets the second requirement because the total of 50 days present in New York during the 548 consecutive day period is less than the maximum of 90 days allowed.
  • To determine if Taxpayer meets the third requirement, Taxpayer must determine if the number of days present in New York during the period July 2, 2020, to December 31, 2020, (the “short” portion of the year during which the 548-day period began) exceeds the maximum allowed for a nonresident portion of the taxable year within which the 548-day period began.
  • The maximum number of days the Taxpayer may be present in New York during this short period is determined as follows:

(183 days in the short period divided by 548 days) x 90 = 30

  • Because Taxpayer was present in New York 15 days during the period July 2, 2020, through December 31, 2020, Taxpayer did not exceed the maximum of 30 days allowed for the period.
  • Therefore, Taxpayer meets the third requirement

Based on the information contained in the above example, Taxpayer meets all three requirements of the 548-day rule and should be considered a nonresident of New York for income tax purposes during the period July 2, 2020, through December 31, 2021, even though they were still treated as a New York domiciliary.

Therefore, this individual would be required to file as a part year resident of New York for the taxable year 2020 and as a nonresident of New York for the taxable year 2021.

New York Income Tax and the Former New Yorker

Even if our soon-to-be former New Yorker (but still U.S. citizen) succeeds in removing themselves from the state by establishing a new domicile overseas, will they be exempted from all New York tax?

Most certainly not.

Exit Tax. Many of you may know that an individual who changes their status from New York resident to nonresident is required to accrue to the period of their New York residence[xxxi] – i.e., include in their final New York resident tax return – any items of income or gain accruing prior to the change of residence status.[xxxii]

For example, assume a New Yorker sold an asset – say, their business – in exchange for a promissory note, and was reporting the gain realized on the sale under the installment method,[xxxiii] recognizing such gain for tax purposes only as principal payments were made under the note. Assume further that the individual successfully abandoned their New York domicile and established a new domicile in a foreign country before the promissory note was fully satisfied. Under New York’s Tax Law, the individual would be required to include in their final New York resident income tax return the amount of gain from the sale that had not yet been recognized by the time they changed their residence status.

Likewise, the former New Yorker would have to include in their final New York resident tax return the portion of their share of S corporation and partnership income, gain, deduction, and loss for the year that accrued to the period of residence.[xxxiv]

New York Source Income. In general, nonresidents – including former residents – are subject to New York personal income tax on their New York source income, which is defined as the sum of income, gain, loss, and deduction derived from or connected with New York sources.[xxxv]

This includes, for example, rental income from real or tangible property located in New York, the gain from the sale of real property or tangible personal property located in NY, the gain from the sale of an interest in certain business entities that own real property in New York,[xxxvi] income from a trade or business carried on in New York,[xxxvii] and the distributive share of partnership or S corporation income or gain sourced in New York.[xxxviii]

If a nonresident carries on a trade or business partly within and partly outside New York, the nonresident must determine the items of income, gain, loss, and deduction that are derived from or connected with New York sources.[xxxix]

Withholding. In order to ensure the collection of New York income tax from nonresidents who are partners or shareholders of partnerships or S corporations, respectively, with income derived from New York sources, the partnership or S corporation, as the case may be, is required to withhold and remit to the Department an amount of tax that is determined by reference to the nonresident’s share of such income multiplied by the highest applicable rate for individuals.[xl]

Similarly, in the case of a nonresident who sells New York real property; a recording officer will not accept or record any deed unless and until the nonresident pays New York income tax on the gain from the sale.[xli]

Intangibles. Although the foregoing list encompasses a great many items of income, there are limits to the state’s reach; for example, New York source income generally does not include income derived from intangible personal property, including dividends and interest, as well as the gains from the disposition of such property.

These items constitute income derived from New York sources only to the extent that the intangible property is employed in a business carried on in New York.[xlii]

New York Estate Tax and the Former New Yorker

As indicated earlier, domicile for purposes of the New York income tax should be the same as domicile for purposes of the New York estate tax.

It should follow, therefore, that if a former New Yorker reported as a nonresident for income tax purposes, their estate would do the same for purposes of the New York estate tax.

Form ET-141. However, New York may disagree with that conclusion. The New York Estate Tax Return, Form ET-706, directs the estate of a decedent that identifies the decedent as a nonresident of New York – i.e., one who is domiciled elsewhere – on the date of death to file Form ET-141, New York State Estate Tax Domicile Affidavit, which solicits information regarding the decedent’s ties to New York as compared to other locations for the purpose of reviewing the estate’s claim that the decedent was not a New Yorker at the time of their death.[xliii]

New York Assets. Assuming a former New Yorker or their estate was successful in demonstrating that the former New Yorker changed their domicile for income tax purposes from New York to a foreign country prior to their death, then the deceased former New Yorker should not be treated as a domiciliary of the state for purposes of the New York estate tax.

However, as in the case of the income tax, if the former New Yorker maintained certain ties to New York, their estate may be exposed to New York estate tax.

Specifically, the estate of such an individual will continue to be subject to the New York estate tax if the deceased former New Yorker owned real property or tangible personal property[xliv] that was situated in New York at the time of their death.[xlv]

Intangibles. A nonresident decedent’s intangible property is considered to have a situs outside New York and is not includible in the decedent’s New York gross estate even though it is part of the decedent’s federal gross estate.

But what about an interest in an LLC? Specifically, a single member LLC that owns New York real property.

The Department has determined that a membership interest in a single member LLC owning New York real property, which is disregarded for federal income tax purposes, should be treated as real property for New York estate tax purposes.[xlvi]

However, when such an LLC elects to be treated as a corporation pursuant to the federal check-the-box rules,[xlvii] the membership interest in the LLC would be treated as intangible property.

Furthermore, the Department has concluded that the election (or the default status) that is in place at the date of death is the election that will be used to determine whether property owned by a single member LLC is treated as real property or intangible property for purposes of New York estate taxes, without regard to any post-death retroactive election to be treated as an association or an S corporation for income tax purposes.[xlviii]

Claw-back. In addition, under New York’s claw-back rule, the taxable estate of the nonresident decedent will include the taxable gifts of real or tangible personal property located in New York[xlix] and of intangible personal property employed in a business, trade or profession carried on in New York State, that were made when the decedent was still domiciled in New York, that were made during the preceding three-year period ending on the decedent’s date of death, and that were not already included in the decedent’s federal gross estate.[l]

The above claw-back applies whether or not the nonresident had retained an interest in the gifted property which they continued to hold at the time of their death. In such an interest had been retained, and if the property in question had been real property located in New York, the transfer of such property would only have been “completed” at the death of the nonresident decedent’s death, and its value would have been included in the nonresident’s New York estate. However, if an intangible had been transferred, its value would not have been included in the nonresident’s New York estate.[li]

Exemption. The estate of a New York nonresident must file a New York estate tax return if the estate includes any real or tangible property located in New York, and the amount of the nonresident’s federal gross estate, plus the amount of any gifts added back pursuant to the claw-back rule (above) exceeds the state’s basic exclusion amount, which is currently $6.11 million.

No estate tax will be owed by the nonresident’s estate if the above sum, less allowable deductions, is not greater than the New York basic exclusion amount.

Before Leaving New York[lii]

In light of the foregoing discussion, how can an individual New Yorker prepare for becoming a nonresident of the state while minimizing their tax pain?

Carefully, well in advance, and with the assistance of qualified advisers.

Income tax. The “exit tax” described above is a surprise to many who aspire to leave New York, and there may not be many options to address it. Of course, one may post a bond as collateral to secure their obligation to pay New York the income tax attributable to the individual’s period of residence, but that, in itself, can be an expensive proposition.

Alternatively, one should consider how to avoid the accrual of income or gain the recognition of which would be accelerated for New York income tax purposes in the year the individual ceases to be a resident.

For example, can a sale of tangible property located outside New York be deferred until after one has departed the state? Can the same approach apply to the sale of intangible property that is not used in a New York trade or business? Perhaps but there may be some economic cost if the tax tail is allowed to wag whatever it is that tax tails wag that they should not. (Right?)

It may be easier to convince a closely held corporation in which the individual is a shareholder to delay the declaration of a dividend until some time after the individual has departed New York.

If the individual owns New York real property that they are planning to sell, they may want to consider a like kind exchange[liii] into replacement real property that is located outside the state. Of course, they would have to continue holding the property for some period after the exchange if they are to achieve the desired deferral.[liv]

Then there is the possibility that the individual will fail to attain nonresident status and will continue to be treated and taxed as a New York domiciliary. What then?

It is imperative that the individual prepare for this scenario by making sure they satisfy the 30-day or the 548-day rules described above. It may not be easy, but the benefit of being considered a nonresident of New York for income tax purposes is probably worth the effort.

Estate Tax. A nonresident noncitizen who is preparing to move to the U.S. can reduce their U.S. estate tax exposure by transferring intangible properties to family members before moving because such transfers by a nonresident noncitizen are not considered taxable gifts.

Somewhat analogously, a New Yorker who is planning to leave the state may take advantage of the fact that New York does not have a gift tax. Such an individual should consider making gifts of tangible property located in New York prior to becoming a nonresident and, thereby, remove such properties from the individual’s New York estate – subject, of course, to the three-year claw-back rule, and only after accounting for the federal gift tax consequences.

Such an individual may also want to consider transferring such properties to business entities that are respected as such (i.e., not disregarded) for tax purposes – thereby “converting” the individual’s interest in the property into an intangible – though the use of such an entity also has to make sense from an income tax perspective.

 Burden of Proof. Planning for the New York income tax and estate tax in anticipation of becoming a nonresident of the state may be considered presumptuous by anyone who is familiar with how doggedly the Department pursues those who claim to no longer be New Yorkers.

For that reason, perhaps the best advice would be to take whatever measures are necessary to abandon New York as one’s domicile. That should include the contemporaneous preparation of whatever records the individual or their estate will require to demonstrate that one has established a new domicile in a specific foreign location.

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The opinions expressed herein are solely those of the author(s) and do not necessarily represent the views of the Firm.


[i] I wonder whether residents of Florida, North Carolina, etc., view the influx of New Yorkers as some sort of plague, perhaps similar to the locusts in Exodus. The northerners are certainly making things more expensive in the south.

[ii] Many Americans are doing just that. https://www.bloomberg.com/press-releases/2022-07-14/record-number-of-americans-exploring-moving-abroad-on-where-can-i-live-since-roe-v-wade-reversal.

[iii] Personal income tax rate of 9.65% for taxable income between $1 million and $5 million (plus 3.876% for a resident of NYC); an average state and local sales tax of at least 8%, and closer to 9% in some counties; real property taxes that regularly are among the highest in the country; and, as a parting gift, there is New York’s 16 percent estate tax.

[iv] We live in uncertain times.

[v] If a permanent resident has to travel outside the U.S. for an extended period, they will need to obtain an authorization that proves they do not intend to abandon their status.

https://jp.usembassy.gov/visas/immigrant-visas/green-card/maintaining-permanent-resident-status/. There is also the “small matter” of IRC Sec. 877A, which treats certain green card holders, who cease to be lawful permanent residents, as having sold all their property at fair market value on the date before their expatriation date.

[vi] 20 NYCRR 105.20(d)(1).

[vii] 20 NYCRR 105.20(d)(4).

[viii] 20 NYCRR 105.20(d)(3).

[ix] 20 NYCRR 105.20(d)(2).

[x] 20 NYCRR 105.20(d)(2).

[xi] Aetna National Bank v. Kramer, 142 AD 444.

[xii] In Matter of Bodfish v. Gallman, 50 AD2d 457.

[xiii] In Matter of Richard and Hazel Rubin, DTA No. 817675.

[xiv] Matter of Newcomb, (192 NY 238). “A temporary residence for a temporary purpose, with the intent to return to the old home when that purpose has been accomplished, leaves the domicile unchanged.”

[xv] 20 NYCRR 105.20(d)(3).

[xvi] Matter of Newcomb, (192 NY 238).

[xvii] Bodfish v. Gallman, 50 AD2d 457. As an aside, the same reasoning would apply in the case of a foreign domiciliary who is residing in N.Y. in connection with a temporary work assignment. Unless the individual has manifested an intention to remain in N.Y. permanently as evidenced, for example, by applying for a green card, it is not likely that they would be deemed to be domiciled in N.Y.

They would be subject to taxation as a statutory resident, however, in any year in which they maintain a permanent place of abode in the state for substantially the entire year and spend more than 183 days in N.Y.

[xviii] Matter of Harold A. Mercer et al, 92 AD2d 636.

[xix] Especially the long-time family home.

[xx] Thus, in affirming that the taxpayers remained domiciled in New York, the Appellate Division in Matter of Herbert D. Klein, et al., 55 AD2d 982 stated that the taxpayers “…returned to their New York residence . . . and lived there through the end of the year…” In reversing the Appellate Division decision in Matter of Rosser Reeves et al., 52 NY2d 959, the Court of Appeals accepted the dissenting opinion that the taxpayers had not shown by clear and convincing evidence an intention to relocate to Jamaica. The Court noted that Mr. Reeves made several trips to New York City during the year in question for a total of 105 days. In addition, the taxpayers retained their home in Westchester to which they eventually returned, albeit it had been unsuccessfully listed for sale. Although in the following case the taxpayer had sold his Rochester home, the Court nevertheless concluded that they had not changed their domicile to the Netherlands, noting that “(h)e returned to this country on numerous occasions.” Matter of Saul A. Babbin, 49 NY2d 846.

[xxi] In a case involving an employee, Matter of Eileen J. Taylor, DTA No. 822824, the taxpayer was a NYC domiciliary who was relocated to London in what was to have been a three-year assignment ending in 2002. The taxpayer’s term of employment was subsequently extended in one-year increments through 2005. In holding that the taxpayer remained domiciled in NYC during the years 2002 to 2004, the Tax Appeals Tribunal stated that during this period the taxpayer’s “presence in London remained sufficiently tenuous and contingent upon her employer’s desire to keep her there…” This was evidenced by the fact that her London assignment was extended for only one year at a time and that her employer had the right to terminate it and reassign her to her home location in N.Y. As the nature of the taxpayer’s assignment was short-term, the Tribunal concluded that her intention to relinquish her N.Y. domicile was not clear and convincing.

[xxii] Matter of Barry Minsky et al., 78 AD2d 955.

[xxiii] In Matter of McKone.

[xxiv] In Matter of Anthony P. & Ilse L. Vogelpoel.

[xxv] However, one taxpayer was able to demonstrate a change of domicile for the years 1988 to 1990 despite not having filed resident income tax returns for those years in Venezuela. This failure and her continued ownership of three apartments in New York City were outweighed by the fact that she requested a job transfer to Venezuela to be with her newly married husband, a citizen and lifelong resident of Venezuela.Matter of Marta R. Santelices-Maldonado, DTA No. 812831.

[xxvi] NYCRR 105.20(d)(3).

In Matter of John L. Bernbach, 98 AD2d 559, the Appellate Division reversed the State Tax Commission in holding that the taxpayer had changed his domicile to France. The Court dismissed the Department’s argument that the taxpayer had not applied for French citizenship stating, “Finally, the Tax Commission relied upon petitioner’s failure to apply for French nationality after residing in France for five years. We find it irrational, however, to require a taxpayer to give up his United States citizenship in order to prove to the Tax Commission that he abandoned his New York domicile.”

[xxvii] Tax Law Section 605(b)(1)(A); 20 NYCRR 105.20(b).

[xxviii] In Matter of Lane V. Gallman, 49 AD2d 963; Matter of Patrick Regan, DTA No. 816588.

[xxix] The taxpayer may claim any period of 548 consecutive days in order to seek treatment as a nonresident under this rule. TSB-A-90(11)I.

[xxx] Advisory Opinion TSB-A-11(3)I.

[xxxi] Without regard to the fact that individuals generally use the cash method of accounting for tax purposes.

[xxxii] NY Tax Law Sec. 639. As an alternative to accruing such items, the taxpayer may file a bond or other acceptable security with the Department to ensure the income is reported and taxed at the appropriate time. Sec. 639(d).

[xxxiii] IRC Sec. 453.

[xxxiv] Tax Law Sec. 639(f). This may be done by accruing such items on a proportionate basis throughout the year or by electing to use the “interim closing of the books” method.

[xxxv] NY Tax Law Sec. 631(a) and (b).

[xxxvi] NY Tax Law Sec. 631(b)(1)A)(1).For purposes of this rule, the term “real property located in” New York was defined to include an interest in a partnership, LLC, S corporation, or non-publicly traded C corporation with one hundred or fewer shareholders, that owns real property located in New York and has a fair market value (“FMV”) that equals or exceeds 50 percent of all the assets of the entity on the date of the sale or exchange of the taxpayer’s interest in the entity.

[xxxvii] NY Tax Law Sec. 631(b)(1)(B).

[xxxviii] NY Tax Law Sec. 631(a)(1)(A) and (B), and Sec. 632.

[xxxix] NY Tax Law Sec. 631(c). New York provides special allocation and apportionment rules for this purpose.

[xl] NY Tax Law Sec. 658(c)(4).

[xli] NY Tax Law Sec. 663. See Form IT-2663, Nonresident Real Property Estimated Income Tax Payment Form.

[xlii] NY Tax Law Sec. 631(b)(2). It should be noted that a nonresident who buys, holds, and sells securities for their own account (not a dealer) will not, by virtue of this activity alone, be treated as engaged in a N.Y. trade or business. NY Tax Law Sec. 631(d).

[xliii] The state may have much to gain from a successful challenge. A resident decedent is subject to New York estate tax on the full amount of their federal taxable estate, minus the value of real property and other tangible property “having an actual situs” outside the state. NY Tax Law Sec. 954.

[xliv] There is an exception for works of art that were on loan to a public gallery in New York for exhibition purposes only. NY Tax Law Sec.960(d).

[xlv] N.Y. Tax Law Sec. 960. In addition, the property must either be includible in the decedent’s federal gross estate, or would have been includible in their New York gross estate pursuant to section nine hundred fifty-seven (relating to certain limited powers of appointment) if the decedent were a resident of New York.

[xlvi] TSB-A-15(1)M.

[xlvii] Reg. Sec. 301.7701-3(c).

[xlviii] TSB-A-16(3)M.

[xlix] Thus, a gift of non-New York real property, or of tangible personal property having an actual situs outside New York at the time the gift was made, is not added back.

[l] NY Tax Law Sec. 960(b). The add back of such taxable gifts applies to the estates of decedents dying before January 1, 2026. NY Tax Law Sec. 954(a)(3).

[li] TSB-A-00(1)M.

[lii] Remember this scene from “A Few Good Men”?

DEFENSE. “Your honor, these are the telephone records from GITMO for August 6th. And these are 14 letters that Santiago wrote in nine months requesting, in fact begging, for a transfer. Upon hearing the news that he was finally getting his transfer, Santiago was so excited, that do you know how many people he called? Zero. Nobody. Not one call to his parents saying he was coming home. Not one call to a friend saying can you pick me up at the airport. He was asleep in his bed at midnight, and according to you he was getting on a plane in six hours, yet everything he owned was hanging neatly in his closet and folded neatly in his footlocker. You were leaving for one day and you packed a bag and made three phone calls. Santiago was leaving for the rest of his life, and he hadn’t called a soul and he hadn’t packed a thing.”

[liii] IRC Sec. 1031. Compare California: https://www.ftb.ca.gov/file/personal/reporting-like-kind-exchanges.html.

[liv] You will recall that the replacement property must be held for investment or for use in a trade or business.