Another “Departure”
During the weeks leading up to the Presidential election, the media carried stories about wealthy supporters from each Party who had announced their intention to leave the country if the other Party’s candidate became President.
Of course, none of these individuals stated they would be giving up their U.S. citizenship or green card,[i] probably because they were aware that such a move (pun intended) would trigger an onerous exit tax.[ii]
In any case, I have yet to hear that any of these disgruntled luminaries has packed their bags and jumped into their private jet for points unknown.
As Dorothy said, “there’s no place like home,” especially if home is in the U.S.[iii]
Leaving NY? That’s Different
Contrast any of these folks with the New York business owner who decides that it is time to leave the State. This individual has done well by most measures, despite having resided and operated a business in a state that perennially occupies one of the two lowest rungs on The Tax Foundation’s annual “State Business Tax Climate Index.”[iv]
When this business owner announces they are leaving New York – after years of being overtaxed and overregulated – they actually follow through. No empty words there.
The State May Disagree
The problem that this putative former resident of New York encounters, however, is that the State’s tax authorities will not always accept the individual’s assertion that they’ve moved to a new home, as we shall see was the case for the taxpayer (“Taxpayer”) described below.[v]
The Issue
The Division of Tax Appeals (the “DTA”) considered whether Taxpayer established a change in domicile from New York to Florida in 2018 and, therefore, ceased to be taxable as a New York domiciliary after that time.
Before concluding that Taxpayer had failed to demonstrate the abandonment of his New York domicile and the establishment of a new domicile in Florida, the DTA thoroughly examined[vi] the five so-called “primary” factors that the State has identified as “fundamental and first in line toward developing a case for New York domicile.”[vii] Its analysis of these factors looked at the New York ties for the specific factor in relation to the ties for the factor that existed in Florida.
Thus, the DTA considered (i) Taxpayer’s use and maintenance of his New York residence compared to the nature and use patterns of the Florida residence; (ii) Taxpayer’s participation in his closely held New York business, including his management of the S Corporation through which such business was conducted (“Corp”); (iii) a quantitative analysis of where Taxpayer spent their time as between New York and Florida during the tax years in question; (iv) the location of Taxpayer’s “near and dear” items, and (v) the location of Taxpayer’s family.
Of these primary factors, our focus in this post will be on the second – Taxpayer’s continued employment, active participation, substantial investment in, and management of Corp.
Before we begin, it is worth noting that a decision concerning domicile cannot be made by examining only one factor.
What’s more, it is very possible that the decision reached concerning an individual’s domicile in one year will not be the same as the conclusion reached in a later year – in other words, one’s change of domicile may be a process,[viii] especially in the case of a business owner.
It is often the case, however, that the owner’s sale of the business[ix] is the bright line that distinguishes a resident from a former resident, at least in the eyes of New York’s tax collectors.
Procedural Background
Taxpayer filed a form IT-203, New York State nonresident and part-year resident income tax return, for the 2018 and 2019 tax years. On each such return, Taxpayer reported a mailing address in Florida.
In August 2020 – just a few months after the filing of the 2019 return – the Division commenced an audit of Taxpayer’s 2018 and 2019 returns.
Based on information obtained during the audit, the Division determined that Taxpayer remained domiciled in New York during those years.
In 2021, the Division issued a notice of deficiency to Taxpayer, who then requested a conciliation conference[x] in protest of the notice. In 2022, BCMS issued a conciliation order sustaining the tax deficiency determined by the Division. Later that year, Taxpayer timely filed a petition with the Division of Tax Appeals for redetermination of the deficiency.
The Business
Taxpayer and Spouse purchased a residence in Upstate New York in 2011. When they acquired this property, their plan was to have it “as our main property until there was a time that [Taxpayer] could step away from work[.]”[xi]
Taxpayer’s Role
In 2018 and 2019, Taxpayer was president of Corp, and held 100% of its issued and outstanding shares of stock.[xii] Corp was located in New York, from where it imported technology components made overseas and shipped them to domestic and foreign customers.
In response to an IDR issued by the Division, Taxpayer stated that his “sole role with the company is Sales. I do not involve myself with any of the day to day operations. I have never had any role other than sales with [Corp].” He further stated that “[w]hether I reside in New York for the summer or Florida for a majority of the non-summer months, my role with the company remains in sales on a part time basis.”
Taxpayer’s 2018 and 2019 forms 1040, U.S. Individual Income Tax Return, reported Taxpayer’s occupations as “MGR/Salesman.”
Taxpayer received wage income from Corp in 2017, 2018 and 2019. The 2017 and 2018 forms W-2, wage and tax statements, he received from Corp reported Taxpayer’s New York address. The 2019 form W-2 reported his address in Florida. The forms W-2 showed that Taxpayer received wage income from Corp in the amount of $270,330 in 2017, $262,282 in 2018, and $127,264 in 2019.[xiii]
Exit Strategy
According to their testimony, in 2016 and 2017 Taxpayer and Spouse started talking about eventually moving their primary residence to Florida, and “it was really 2018 before we could, our lives were such that we could really make that permanent move.”
Taxpayer explained that the transition to Florida was part of his retirement plan. He wanted to slow down at work, come up with an “exit strategy” from Corp, and turn the business over to others or sell it.
Plan A – Family
Taxpayer’s initial “exit strategy” from Corp was to transfer the business to his son (“Son”[xiv]), who worked in the financial industry in Illinois.
Taxpayer introduced into the record an outline he had created for this plan, indicating that in August 2018, Taxpayer would cut his salary to $250,000.00 a year, plus 70% of profit, and Son would receive $150,000.00 a year, plus 30% of Corp‘s profit,[xv] plus commissions, and in August 2020, Taxpayer would go part-time, receive a cash payout of $500,000.00 and receive $125,000.00 a year, plus 15% of Corp’s profit for 10 years. The outline further stated that, starting in August 2020, Son would receive a salary of $300,000.00 a year, plus 51% of the Corp’s profit, while Taxpayer’s other two children would each receive 17% of the profit.
The plan to transfer Corp to Son was terminated in or around June 2018 due to tariffs[xvi] imposed by the U.S. on products from China. Corp had many products on the tariff list and Taxpayer was concerned about its impact on the business and did not want Son to take that risk.[xvii]
Plan B and Plan C
After the plan to transfer ownership of Corp to Son was discontinued, Taxpayer moved on to “plan B” of his exit strategy, which was to diminish his role at Corp and transfer responsibilities to others in the company.
At the same time, Taxpayer also began pursuing “plan C,” which was to investigate opportunities to sell Corp to third parties.
Plan B: Successors – Key Employees
As part of plan B, Taxpayer transferred some of his responsibilities to General Manager, who was a key employee of Corp.
General Manager started working for Corp in 2002 as Director of Engineering and was promoted a year later to operations manager. In 2018, he was promoted to the position of general manager. By 2019, General Manager had assumed responsibility for Taxpayer’s previous customers.[xviii] According to General Manager, “[o]ver the last 13 to 14 years of working for [Corp], I ran the Company. I handled every aspect of the business and every Company customer[.]”
As part of Taxpayer’s reduction of responsibilities, management of the inside sales team was transferred to General Manager. Taxpayer also delegated major customer sales accounts to others at Corp during the transition process.
Still, Taxpayer testified that, in 2018, when he was in New York, he would go into the Corp office “most every day.”
However, Taxpayer also testified that, in 2019, he initiated “probably zero” meetings and, when he was in Florida, he would seldom make telephone calls to people from Corp.
Another Corp employee, Account Manager, testified that Taxpayer remained involved with Corp in 2018 and 2019, but in 2019 his interactions were limited.
At the end of 2018 or beginning of 2019, Account Manager became involved with the Top account, which was one of Corp’s top ten or fifteen customers at the time. Later in 2019, Account Manager’s interactions with Taxpayer were limited, but Taxpayer “remained about 10% to 15% involved” in the Top account, which then became one of the top five to ten customers of Corp. Also in 2019, 99% of the oversight of Corp’s factory in China was transferred to Account Manager.
Another employee, Comptroller, was hired in July 2019 to support General Manager in his general manager role as part of the transition. Comptroller’s duties included, among other things, preparing all financial statements, establishing and maintaining budgetary controls, directing and performing accounts receivable, accounts payable and general accounting functions, managing and processing cash receipts, cash disbursements and making appropriate cash management decisions, ensuring tax compliance, overseeing and approving payroll, and managing human resource functions.
Plan C: An Offer to Buy
In October 2019, Taxpayer received an unsolicited communication on behalf of Interested Party that expressed an interest in buying Corp. While in Florida, Taxpayer entered into discussions with the owner of Interested Party. In 2020, Taxpayer shared financial information and entered into a nondisclosure agreement (NDA), which he signed as “President” of Corp. Ultimately, a deal with Interested Party did not come to fruition.
Plan C: The Sale
In November 2021, Taxpayer consummated a deal to sell Corp to Buyer A press release regarding the sale identified Taxpayer as president of Corp.
As part of the purchase agreement with Buyer, Taxpayer agreed to remain with the company for two years, until December 31, 2023, for purposes of transitional change. According to Taxpayer, his responsibilities and active participation in the business did not increase as a result of the acquisition and Buyer did not want him to be present every week.
DTA’s Decision
The DTA’s decision began by setting forth the definition of a New York State resident individual for income tax purposes[xix] as someone: “(A) who is domiciled in this state, unless (i) the taxpayer maintains no permanent place of abode in this state, maintains a permanent place of abode elsewhere, and spends in the aggregate not more than thirty days of the taxable year in this state . . ., or (B) who maintains a permanent place of abode in this state and spends in the aggregate more than one hundred eighty-three days of the taxable year in this state, whether or not domiciled in this state for any portion of the taxable year, unless such individual is in active service in the armed forces of the United States.”
The classification of resident versus nonresident is significant, the DTA explained, because nonresidents are taxed only on their New York source income, whereas residents are taxed on their income from all sources.
Thus, the only question before the ALJ concerned Taxpayer’s domicile, upon which resident status would be premised.[xx]
Domicile
The Division’s regulations define “domicile,” in part, as follows: “(1) Domicile, in general, is the place which an individual intends to be such individual’s permanent home – the place to which such individual intends to return whenever such individual may be absent. (2) A domicile once established continues until the individual in question moves to a new location with the bona fide intention of making such individual’s fixed and permanent home there.
Thus, domicile is established by physical presence and intent. A person can have only one domicile.[xxi] An existing domicile continues until a new one is acquired. The party asserting the change of domicile bears the burden to prove, by clear and convincing evidence, a change in domicile.[xxii]
Whether there has been a change in domicile is a question of fact rather than law, and will frequently depend upon a variety of circumstances. Generally, this means that a taxpayer must show a change of lifestyle to prove a change of domicile, and “[t]here must be a present, definite and honest purpose to give up the old and take up the new place as the domicile of the person whose status is under consideration.”
In order to establish a new domicile, “the taxpayer must prove his subjective intent based upon the objective manifestation of that intent displayed through his conduct.” The New York courts and the Tax Appeals Tribunal “have consistently looked to certain objective criteria to determine whether a taxpayer’s general habits of living demonstrate a change of domicile”; specifically, the primary factors outlined earlier, including the individual’s business activity.[xxiii]
An examination of these factors must evidence an intention “[t]o change one’s domicile requires an intent to give up the old and take up the new, coupled with an actual acquisition of a residence in the new locality.”
There was no dispute, the DTA stated, that Taxpayer was domiciled in New York in the years preceding the years at issue. As such, Taxpayer had the burden of proving, by clear and convincing evidence, that he changed his domicile to Florida. The record was clear that Taxpayer planned to make Florida his permanent home at some point. The question was, when did Taxpayer’s plan finally materialize such that he effectively changed his lifestyle “to give up the old and take up the new place.”
Upon review of the entire record, and pursuant to the foregoing standards, the DTA concluded that Taxpayer did not prove, by clear and convincing evidence, that he gave up his NY domicile and acquired a new domicile as his fixed and permanent home in Florida as of late 2018.
What follows is the DTA’s consideration of the “business factor.”
As indicated above, Taxpayer and Spouse intended to occupy their present home until there was a time that Taxpayer could “step away from work[.]” According to Taxpayer, in 2016 and 2017, Taxpayer started talking about eventually moving his primary residence to Florida but “it was really 2018 before we could, our lives were such that we could really make that permanent move.” Taxpayer planned to eventually make Florida their permanent home.
The record showed that plan did not materialize in 2018 or 2019 due to the continuing demands from Taxpayer’s business, Corp. Taxpayer’s transition to Florida hinged upon his retirement plan and his ability to slow down at work and come up with an “exit strategy” from Corp.
However, Taxpayer’s exit plan was not completed in 2018 or 2019. He put steps in place during 2018 and 2019 to reduce his involvement with Corp, so that at some point, Taxpayer could realize his plan of making Florida his domicile. Taxpayer was not ready to “give up the old and take up the new” domicile until his plans to transition out of Corp were solidly in place.
Taxpayer initially intended to transfer the company to Son, so he could exit the company. This plan was thwarted by the new tariffs imposed on imports in 2018. Thus, Taxpayer was forced to delay his plans due to concerns over what impact the tariffs would have on the business. As Taxpayer testified, he didn’t want to put his son in the position of taking on a business risk.
With that, Taxpayer moved on to plan B, delegating responsibilities to others in Corp so that he would have less involvement with the business and could spend more time in Florida.
At the same time, Taxpayer initiated plan C, pursuing third party purchasers for Corp.
Taxpayer was unable to step away from the business in 2018 and his planning and business activity with Corp continued into 2019. Contrary to Taxpayer’s argument that the transition to Florida occurred towards the end of 2018, the correspondence from Taxpayer’s trusts and estates attorney stated that Taxpayer’s business succession planning for Corp was still ongoing in early 2019, and was then put on hold until Taxpayer could determine the best course forward due to the tariffs.
Thus, in 2018 and 2019, Taxpayer was still in the planning stage and did not yet have a definite transition plan in place that would allow him to exit Corp and fully abandon the old lifestyle and take up the new one in Florida. Faced with the demands of Corp’s business, Taxpayer was not prepared “to give up the old and take up the new place as [his] domicile” in 2018 and 2019.
Taxpayer’s argument that he made a “permanent move” to Florida in October 2018 was further contradicted by Taxpayer’s 2018 form W-2 from Corp, which reported his address in New York.[xxiv] Although Taxpayer took steps to minimize his business ties with Corp in 2019, including delegating large customer accounts to others within the company and hiring Comptroller to assist General Manager in his general manager role, Taxpayer’s involvement with Corp continued until at least 2021, when he sold the company. Indeed, Taxpayer continued as president of Corp during the years at issue, signed an NDA in his capacity as president of Corp in 2020, and had the sole authority as president and 100% owner of Corp to decide when to sell the business.[xxv]
Indeed, Taxpayer did not relinquish control of Corp until the sale to Buyer in 2021. Further, as part of the sale of Corp to Buyer, Taxpayer agreed to stay on with the company for an additional two years, until December 31, 2023. As such, Taxpayer’s continuing business activities in New York did not support Taxpayer’s claim of a change of domicile during the years at issue.[xxvi]
The evidence showed that while Taxpayer intended to change his domicile to Florida at some point, such change of lifestyle happened gradually over the course of time such that Taxpayer had not clearly established that during October 2018 he had “an absolute and fixed intention to abandon [his New York domicile] and acquire another.” As such, Taxpayer failed to meet his burden of proof to show that he changed his domicile for the years at issue and that Division’s determination was erroneous.[xxvii]
Thus, the ALJ denied Taxpayer’s petition and sustained the notice of deficiency.
Observations
Taxpayer was probably more methodical in his approach to withdrawing from his New York business, and from the State generally, than many other business owners (“non-planners”) who may be contemplating a change of domicile, whether or not in connection with, or a result of, the upcoming sale of their business.[xxviii]
What Plan?
Among the non-planners are those who, on the “eve” of selling their business,[xxix] suddenly realize how much tax they will owe New York on the gain from the sale and, in reaction thereto, try to establish a new domicile in a low-or-no tax state. These folks are doomed to fail.[xxx]
Also included within this group are those who may not have been looking for a buyer but who receive an irresistible, albeit unsolicited, offer for their business.[xxxi] Under such circumstances,[xxxii] the owner would be better served if they tried negotiating at least a partial gross-up for the New York tax liability instead of trying to convince the tax authorities that they were planning to leave the State.
Exit Tax
Then there are those business owners who succeed in changing their domicile – in connection with which they sold their business – but whose “departure date” occurs before they have received the full purchase price for their business.[xxxiii]
One of these owners may have acquired an expensive home elsewhere – maybe with a dock[xxxiv] or on a golf course[xxxv] – while also keeping the “family home” in New York;[xxxvi] they may have moved their near and dear items (such as they are) to the new home; their spouse may have started spending more time at the new home, as compared to the old New York residence; their kids may be grown and live in some God-forsaken land called California.[xxxvii] All that remains in New York is the owner’s most valuable asset – the business – for which a buyer has not yet been found, and which requires the owner’s complete attention and full-time presence in New York.
It is doubtful, on the basis of this not uncommon fact pattern, that the business owner will succeed in demonstrating they have abandoned their New York domicile and established a new domicile at wherever the new residence is located. This outcome quickly changes, however, when the business is sold.
Unfortunately, New York’s Tax Law[xxxviii] provides that if an individual taxpayer changes their tax status from a resident to a nonresident, they will be required to include in their New York income any items of gain, income, loss, or deduction that accrued during the period of residence. Under this method of accounting, an item must be included in the individual’s taxable year during which “all the events have occurred that fix the right to receive the income and the amount of the income can be determined with reasonable accuracy . . . ”[xxxix]
Thus, if Taxpayer had changed their status from resident to nonresident during the year in which Corp’s business was sold, Taxpayer would have been required to apply the accrual method of accounting to any items of gain that would have accrued by the time of Taxpayer’s change of residence, including any unpaid balance of the purchase price reflected, say, in an installment note.[xl]
However, if Taxpayer were somehow able to convince the State or a Court that he ceased to be domiciled in New York prior to the sale of the business – more accurately, prior to the time that his stock ownership in Corp entitled him only to the proceeds from the sale of the business, as opposed to a share (i) of the profits of a going concern, or (ii) of its assets in some future liquidation – then it may be shown that the gain from the subsequent sale had not accrued by the time of Taxpayer’s change in resident status. At that point, the source of the gain or income required to be recognized – often dependent upon the structure of the transaction as a sale of Corp’s stock or of its assets – would have determined Taxpayer’s New York tax liability.
The problem for many business owners, as alluded to above, is that the sale of the business is often the factor that tips the scales toward nonresident status; in other words, the successful change in status is often contingent on the sale of the business, which, means New York will be able to claim its share of the now-former owner’s efforts.
Even the Best of Plans?
Which brings us back to Taxpayer.
Taxpayer seemed to be heading in the right direction under Plan A when he considered turning over management and a gradually increasing ownership of the business to Son. Of course, we don’t know whether Taxpayer would have stepped away sufficiently to allow Son actual control of Corp and to support treating Taxpayer as a passive investor. In any case, the scheduled transition of ownership was to occur over a few years, which would not have supported Taxpayer’s alleged change of domicile in October 2018.[xli]
When Taxpayer decided Plan A was no longer viable, he turned to Plan B – turn over day-to-day management and operation of Corp’s business to a few key and trusted employees. Assuming Taxpayer was able to entice these individuals to remain with Corp as Taxpayer withdrew from the business, this plan may have worked, provided Taxpayer accepted a greatly reduced, even passive, role in the business. As we saw above, Taxpayer – like so many business owners – was unable to let go.
In fact, it probably behooved Taxpayer not to let go. Unless Taxpayer intended to sell the business to these employees, one has to recognize that Plan B was just a step toward the sale of the business to an outsider; in other words, the implementation of Plan C. In light of that fact, it would have made sense for Taxpayer – as the only player with an investment at risk in the business – to remain engaged until the sale of the business.[xlii] Of course, that helped New York’s position.
It seems nothing is easy.
The opinions expressed herein are solely those of the author(s) and do not necessarily represent the views of the Firm.
[i] Permanent legal residents cannot vote for President.
[ii] Under IRC 877A, a “covered expatriate” is treated as having sold all of their property for its fair market value on the day before their expatriation date; i.e., while they are still subject to U.S. income tax on their worldwide income.
[iii] I am confident they won’t find a better place to call home.
[iv] https://taxfoundation.org/statetaxindex/states/new-york/#:~:text=New%20York%20%7C%20%2350%20Overall,burdensome%20and%20nonneutral%20tax%20structure. New York and New Jersey are forever jockeying for the 49th spot.
[v] In the Matter of the Petition Hoff DTA NO. 850209.
[vi] It is worth reading the DTA’s decision.
[vii] “Nonresident Audit Guidelines,” https://www.tax.ny.gov/pdf/2021/misc/nonresident-audit-guidelines-2021.pdf .
[viii] Dare I say it’s a “journey”? Journey, get it? Ba-dum-bum-ching! Oh well.
[ix] And the payment of the tax liability arising therefrom.
[x] With the Bureau of Conciliation and Mediation Services (BCMS).
[xi] The couple continued to own and maintain this home during and subsequent to the years at issue.
[xii] Taxpayer acquired Corp in 1989.
[xiii] Note the reduction over time. This is what one would expect if the business owner was reducing their involvement in the business.
[xiv] In the 1970s Western movie, Big Jake, John Wayne’s character calls his obedient, but vicious, canine companion, “Dog.” If it was good enough for the Duke, . . .
[xv] Presumably, this meant that Taxpayer would either gift or sell shares of Corp stock to Son.
[xvi] There’s that word again. What would Adam Smith say? I imagine there will be renewed interest in his work.
[xvii] Correspondence from Taxpayers’ trusts and estates attorney, dated December 15, 2020, described discussions she had with Taxpayer regarding his business succession planning concerns. The correspondence stated, in part, that: “in 2018 to early 2019 we worked on business succession planning for [Corp] as well as estate planning for [Taxpayer ] and his wife. * * * [Taxpayer] was interested in developing an exit strategy for the business as well as a retirement plan for himself. * * * My discussions with [Taxpayer] about implementing a plan for the transition of ownership in the business were terminated when the US imposed significant import tariffs on products from China and [Taxpayer] had the opportunity to assess the financial impact of those tariffs on the company. [Taxpayer] decided to put the discussions and implementation of a business succession plan for the company on hold until he could further determine the best course forward. He did not want to ask [Son] to give up his work in [Illinois] to join the company with the instability arising from the China tariffs.”
[xviii] Taxpayer introduced into the record the affidavit of General Manager.
[xix] NY Tax Law Sec. 605(b)(1)(A) and (B).
[xx] The Division did not raise statutory residency as an issue and Taxpayers did not dispute they spent more than thirty days in NY and maintained a permanent place of abode there.
[xxi] If a person has two or more homes, such person’s domicile is the one which such person regards and uses as such person’s permanent home. In determining such person’s intentions in this matter, the length of time customarily spent at each location is important but not necessarily conclusive.” 20 NYCRR 105.20 [d].
[xxii] 20 NYCRR 105.20 [d] [2].
[xxiii] A seminal case on this point is Matter of Kartiganer, Tax Appeals Tribunal, October 17, 1991.
[xxiv] Indeed, under the initial plan to transfer Corp to his son, Son, Husband’s business activity with Corp would have continued well into 2020, when he would then go part time and receive a cash payout plus payments and a portion of the profits for 10 years.
[xxv] Perhaps as a result of Taxpayer’s continued involvement with Corp and its business, the record showed that Taxpayer spent more days in New York than in Florida in each of 2018 and 2019.
[xxvi] Of course, the DTA’s statement raises the question of whether Taxpayer’s consulting arrangement with the purchaser of his former business prevented Taxpayer from successfully abandoning his New York domicile. Nuts.
[xxvii] NY Tax Law Sec. 689 [e].
[xxviii] Again, this is only one of the factors considered in determining whether there has been a change of domicile, though it is a weighty one, and often determinative.
[xxix] Sometimes literally on the eve, or close enough to it, for all intents and purposes.
[xxx] There are those within this group who will ask how long they must stay out of New York in order to ensure their gain from the sale is not taxed by the State. What can I say? “Intent” means different things to different folks.
[xxxi] A “Godfather Offer.”
[xxxii] Some may say “fortuitous.”
[xxxiii] A Pyrrhic victory.
[xxxiv] Presumably for that fishing boat they will purchase one day.
[xxxv] I can’t imagine why.
[xxxvi] As a hotel substitute.
[xxxvii] Often ranked 48th in The Tax Foundation’s report, supra.
[xxxviii] NY Tax Law Sec. 639 (a).
[xxxix] 20 NYCRR 154.10. In the case of a sale that includes an earnout or other contingency, see Treas. Reg. Sec. 15.453-1(d)(2)(iii) (“Only in those rare and extraordinary cases involving sales for a contingent payment obligation in which the fair market value of the obligation (determinable under the preceding sentences) cannot reasonably be ascertained will the taxpayer be entitled to assert that the transaction is ‘open.’”)
[xl] NY Tax Law Sec. 639(a).
[xli] Hypothetically, if Son had stepped in, and if Taxpayer had convinced the key employees to stick around, Plan A would have offered Taxpayer the best shot at maintaining some ownership in Corp (with the attendant dividend distributions, and perhaps deferred compensation) while also removing himself from New York resident status.
[xlii] That Taxpayer’s continued “presence” was important was reflected in Buyer’s requiring him to stay on for two years after the sale.
