On December 21, 2020, a three-judge panel of California’s Office of Tax Appeals (“OTA”) ruled in a non-precedential opinion that an ophthalmologist successfully abandoned his California domicile and became a California nonresident from May 25, 2013 through December 31, 2013 after moving to Saudi Arabia. For a brief overview of the various legal concepts involved in and tests applied during California’s residency analysis, see our prior post on “What Makes a California Resident?

Here, the OTA found that the taxpayer moved to Saudi Arabia in May 2013 with the intention of staying indefinitely, despite the fact the taxpayer ultimately returned to California to reside in 2015. The panel based its ruling on a number of uncontroverted facts, including: the taxpayer’s marriage to his former spouse was irreparably broken when he moved, as the two had separated 20 months prior; the taxpayer sold his property in California, including his cars, and closed his California bank accounts; and the taxpayer rented an apartment in Saudi Arabia under a two-year lease, joined a mosque, found a job as an ophthalmologist, bought a new car, obtained a local driver’s license (valid for 10 years), and became engaged to a Saudi woman. The taxpayer supported his position with testimony from a number of individuals, including family members and work colleagues, which the OTA found to be credible and consistent.

The OTA rejected the Franchise Tax Board’s (“FTB”) argument that the taxpayer continued to be a California domiciliary and was in Saudi Arabia for a temporary and transitory purpose. The FTB’s principal contention was that the taxpayer remained a California domiciliary because his minor children continued to reside in the state during his absence. The OTA concluded that the taxpayer had no choice but to leave the children with their mother because she had commenced a dissolution action against him and would not allow the children to go to Saudi Arabia.  The FTB also noted that the taxpayer did not cancel his California voter registration, driver’s license, or license to practice medicine.  However, during the period the taxpayer resided in Saudi Arabia, “he did not vote in California, and neither his California driver’s license nor his California license to practice medicine came up for renewal.” Additionally, while the taxpayer passively maintained a medical license, he did not practice medicine in California from May 2013 through the end of the year. Lastly, the OTA found that the taxpayer’s use of his parents’ mailing address in California did not show an intention to return to California, but instead reflected the difficulty of forwarding mail to Saudi Arabia.

Appeal of A. Kahn, 2021 – OTA – 064 (Dec. 21, 2020) (non-precedential).