If a family moves their domicile out of New York mid-year and empties out their only New York home, are they still taxed as full-year statutory residents just because they spent more than 183 days in New York that year?

Plain-English summary

Carl and Nancy Kukulka lived at 1 Vantage Drive in Pittsford, New York through August 13, 1996. Carl was a physical therapy professor at Ithaca College, and Nancy worked for the Canandaigua City School District until she permanently ended that job on June 14, 1996. In February 1996, Carl accepted a full-time, permanent position as chairperson of the Department of Physical Therapy at the University of Florida in Gainesville. He relocated on May 31, 1996 and started work on June 3, 1996, while Nancy and their two minor children stayed behind in Pittsford. The New York house - the family's only place of abode - was listed for sale with a broker before the move, but the sale did not close until November 21, 1996. On August 13, 1996, the rest of the family permanently moved to a newly purchased Florida home, and professional movers relocated all household furnishings, clothing, and other personal effects between August 9 and August 17, 1996. The family occupied the Florida home starting August 17, 1996, and fully reoriented their lives there: enrolling the children in Florida schools, registering to vote in Florida, and deactivating their New York physical therapy licenses. After August 17, 1996, the New York house held no furniture, clothing, or other property that wasn't for sale, and the only utility kept running was heat to prevent frozen pipes.

The Department analyzed whether the Kukulkas were "statutory residents" of New York for all of 1996 under Tax Law § 605(b)(1)(B), which treats a nondomiciliary as a resident for the full year if they maintain a permanent New York place of abode and spend more than 183 days in New York during the year. But 20 NYCRR § 105.20(a)(2) also requires that the permanent place of abode be maintained for "substantially all of the taxable year," which the Department's Income Tax Nonresident Audit Guidelines (May 9, 1994) define as a period exceeding 11 months - so, for example, disposing of the abode by October 30 defeats statutory residency for the full year even if the person was in New York more than 183 days. Because the Kukulkas cleared out all furnishings, clothing, and personal effects from the Pittsford house by August 17, 1996, they fell well short of that 11-month threshold, regardless of how many days they had already spent in New York earlier in the year.

Citing Matter of Kritzik v. Gallman (taxpayers who moved from New York to Connecticut in late July no longer maintained a permanent New York abode) and Matter of Palmquist, TSB-H-86(86)I (taxpayers who changed domicile to New Hampshire and stopped maintaining a New York abode became part-year residents), the Department concluded that the Kukulkas did not maintain a permanent New York place of abode for substantially all of 1996. They are therefore part-year residents for 1996 - residents from January 1 through August 17, 1996 (when they changed their domicile to Florida and stopped maintaining the New York home), and nonresidents from August 18 through December 31, 1996.

What this means for you

Taxpayers relocating out of New York mid-year

If you move your domicile out of New York partway through the year, spending more than 183 days in New York before you leave does not automatically make you a full-year statutory resident. What controls is whether you kept maintaining a permanent New York place of abode - meaning it still functioned as a livable home with your furnishings, clothing, and personal effects - for more than 11 months of the year. Once you clear the home out and stop using it as a residence, you can be treated as a part-year resident from that date forward, even if the sale of the house itself hasn't closed yet.

Accountants and tax professionals computing part-year New York returns

To draw the resident/nonresident split correctly, pin down the date the client actually stopped maintaining the New York home as a livable residence - here, the date professional movers finished removing furnishings and personal effects (August 17, 1996) - rather than the date the sale closed (November 21, 1996) or the date the taxpayer's job or domicile formally changed. Keeping minimal utilities running (such as heat to prevent frozen pipes) on an otherwise empty, listed-for-sale house does not, by itself, count as continuing to maintain a permanent place of abode.

Common questions

Q: Why doesn't spending more than 183 days in New York decide statutory residency by itself?
A: Tax Law § 605(b)(1)(B) requires both elements: spending more than 183 days in New York during the year AND maintaining a permanent New York place of abode for substantially all of that year. The Kukulkas met the 183-day count, but because they stopped maintaining their New York home by August 17, 1996, they did not satisfy the "substantially all of the taxable year" requirement, so full-year statutory residency did not apply.

Q: What does "substantially all of the taxable year" mean in practice?
A: Per the Department's Income Tax Nonresident Audit Guidelines (May 9, 1994), it means a period exceeding 11 months. The Guidelines give the example of an individual who disposes of a New York abode by October 30 of the tax year - that person is not a statutory resident for the full year even if they spent over 183 days in New York.

Q: Did listing the New York house for sale before the move matter, or was it the November 21, 1996 closing date that counted?
A: The Department's analysis turned on when the Kukulkas stopped maintaining the house as a livable residence - that is, when their furnishings, clothing, and personal effects were moved out (August 17, 1996) - not on when the sale actually closed. The house had been listed for sale beforehand, which supported that it was no longer being used as a personal residence, but the closing date itself was not the operative cutoff.

Q: What is the difference between a "statutory resident" and a "part-year resident"?
A: A statutory resident under Tax Law § 605(b)(1)(B) is a nondomiciliary who is treated as a full-year New York resident because of the permanent-abode-plus-183-days test. A part-year resident under Tax Law § 605(b)(5) is someone who is a resident for only part of the year and a nonresident for the rest, filing a return that splits income between the two periods.

Q: Does keeping the heat on to prevent frozen pipes count as continuing to maintain the New York home as an abode?
A: No. The Department treated the house as no longer maintained as a place of abode once it was cleared of furniture, clothing, and personal effects, even though minimal utility service (heat, to protect the property from freezing) continued.

Q: What prior cases did the Department rely on, and what did they establish?
A: Matter of Kritzik v. Gallman, 41 AD2d 994 (1973), held that taxpayers who moved from New York to Connecticut in late July no longer maintained a permanent New York place of abode and so could not be statutory residents for the full year. Matter of Robert P. Palmquist and Betty G. Palmquist, TSB-H-86(86)I, held that taxpayers who changed their domicile to New Hampshire and stopped maintaining a New York abode became nonresidents (and thus part-year residents) for the remainder of that year.

Citations and references

• Tax Law § 605(b)(1)(B) - statutory resident test: a nondomiciliary who maintains a permanent New York place of abode and spends more than 183 days of the taxable year in New York
• Tax Law § 605(b)(5) - definition of a part-year resident individual
• 20 NYCRR 105.20(a)(2) - requires the permanent place of abode be maintained for "substantially all of the taxable year" to trigger statutory residency
• 20 NYCRR 105.20(e) - defines a permanent place of abode as a dwelling place permanently maintained by the taxpayer (or the taxpayer's spouse)
• Department's Income Tax Nonresident Audit Guidelines (May 9, 1994), p. 35 - interprets "substantially all of the taxable year" as a period exceeding 11 months
• Matter of Kritzik v. Gallman, 41 AD2d 994 (1973) - move to Connecticut in late July ended maintenance of a permanent New York abode
• Matter of Robert P. Palmquist and Betty G. Palmquist, TSB-H-86(86)I (Apr. 28, 1986) - domicile change and end of New York abode maintenance produced part-year residency

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income_ao_1997.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/income/a97_3i.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-97(3)I
Income Tax

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. I961022A

On October 22, 1996, a Petition for Advisory Opinion was received from Carl
and Nancy Kukulka, 4512 Northwest 58th Avenue, Gainesville, Florida 32653.
The issue raised by Petitioners, Carl and Nancy Kukulka, is whether they
are statutory residents for the entire 1996 taxable year pursuant to section
605(b)(1)(B) of the Tax Law or are part-year residents up to the date that they
changed their domicile to Florida.
Petitioners submit the following facts as the basis for this Advisory
Opinion.
Petitioners state that they resided at 1 Vantage Drive, Pittsford, New York
in 1995 and until August 13, 1996. As a New York resident, Carl Kukulka was
employed as a professor of physical therapy at Ithaca College in Ithaca, New
York. Nancy Kukulka was an employee of the Canandaigua City School District in
Canandaigua, New York. She terminated her employment on a permanent basis on
June 14, 1996.
In February, 1996, Carl Kukulka accepted a full time permanent position as
chairperson of the Department of Physical Therapy of the College of Health
Professions at the University of Florida in Gainesville, Florida. Mr. Kukulka
states that his job description describes a permanent position which includes
many responsibilities for long-term planning and department development.
In anticipation of their relocation, the family residence and only place
of abode owned by the Kukulkas was listed for sale with a real estate broker.
The Petitioners closed the sale of their New York residence on November 21, 1996.
Mr. Kukulka relocated from New York on May 31, 1996 to formally begin work
on June 3, 1996 as department chairman at the University of Florida. Other
members of the family, including Mrs. Kukulka and their two minor children,
continued to reside in Pittsford until August 13, 1996, at which time all family
members permanently moved all of their belongings, other than the real property,
to their newly purchased house residence located at 4512 Northwest 58th Avenue,
Gainesville, Florida 32653.
All household furnishings, clothing and other tangible personal effects
were moved by professional movers from Pittsford to Gainesville during the period
between August 9, 1996 and August 17, 1996. The Kukulkas occupied their Florida
residence on August 17, 1996.
The Petitioners state that they changed their domicile to Florida when they
moved to Florida in August. They state that they have totally oriented their
life to permanent residency in Florida, including enrollment of their children
in Florida schools, registration as Florida voters, purchase of a substantial

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TSB-A-97(3)I
Income Tax

residence in Florida, permanently changing their address and the establishment
of relationships with Florida commercial and service providers. Both Petitioners
have notified New York State to inactivate their New York physical therapy
licenses. When they moved to Florida, the only tangible property interest that
remained in New York State was the Petitioners' New York home which contained no
furniture or clothing or any other property that was not listed for sale. The
New York property was not used after August 17, 1996, and the only utilities kept
in service were to keep the heat on so that the pipes would not freeze.
Section 605(b) of the Tax Law defines a resident and nonresident individual
as follows:
(1) Resident individual. A resident individual means an individual:
(A) who is domiciled in this state, unless (i) he 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 is not domiciled in this state but maintains a
permanent place of abode in this state and spends in the aggregate
more than one hundred eight-three days of the taxable year in this
state ...
(2) Nonresident individual.
A nonresident individual means an
individual who is not a resident or a part-year resident.
...
(5) Part-year resident individual. A part-year resident individual
is an individual who is not a resident or nonresident for the entire
taxable year.
Section 105.20(a)(2) of the Personal Income Tax Regulations provides that
a resident individual includes any individual who is not domiciled in New York
State, but who maintains a permanent place of abode for substantially all of the
taxable year (generally, the entire taxable year disregarding small portions of
such year) in New York State and spends in the aggregate more than 183 days of
the taxable year in New York State.
Section 105.20(e) of the Personal Income Tax Regulations, defines a
permanent place of abode as a dwelling place permanently maintained by the
taxpayer, whether or not owned by such taxpayer, and will generally include a
dwelling place owned or leased by such taxpayer's spouse.
The Department of Taxation and Finance Income Tax Nonresident Audit
Guidelines dated May 9, 1994, provides, on page 35, that for statutory resident
purposes, the phrase "substantially all of the taxable year" means a period
exceeding 11 months. For example, an individual who maintains a permanent place
of abode at the beginning of the year but disposes of it on October 30th of the
tax year would not be a statutory resident for the entire year despite spending
over 183 days in New York State.

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Income Tax

In the Matter of Kritzik v Gallman, 41 AD2d 994 (1973), the taxpayers moved
from New York to Connecticut on July 27, 1967. The taxpayers tried to establish
that they were statutory residents of New York for the entire year 1967, so that
the distributive share of partnership losses of the husband could be taken into
account in computing their New York tax liability for the year.
The court
rejected the contention, stating that "[w]hen petitioners moved to Connecticut
in July, they no longer maintained a permanent place of abode in New York. They
could not, therefore, meet the statutory requirements for residents. (Tax Law,
§605, subd. [a], par.[2].)" This implies that had they maintained a permanent
place of abode for the year in New York and met the other requirements of the
statute, they could have established that they were statutory residents for the
years, despite having changed their domicile during the year.
In the Matter of Robert P. Palmquist and Betty G. Palmquist, Dec St Tax
Commn, April 28, 1986, TSB-H-86(86)I, the petitioners were domiciliaries and
residents of New York State. On or about September 1, 1981, petitioners changed
their domicile to New Hampshire. Since they did not maintain a permanent place
of abode in New York State after September 1, 1981, they were nonresidents of New
York State for the last four months of 1981. Accordingly, the petitioners were
part-year residents for that taxable year.
In this case, the question is whether the Petitioners maintained a
permanent place of abode for substantially the entire taxable year.
The
Petitioners moved all of their household furnishings, clothing and other tangible
personal effects to their new home in Florida on August 17, 1996. Petitioners
state that since August 17, 1996, when they changed their domicile to Florida,
the New York house did not contain any furniture or clothing or any other
property that was not for sale. Prior to the move in August, the New York house
was listed for sale with a real estate broker, and the closing on the sale of the
house occurred on November 21, 1996.
Therefore, like Kritzik, supra, and
Palmquist, supra, and pursuant to the Department's Audit Guidelines, the
Petitioners did not maintain a permanent place of abode in New York State for
substantially all of the taxable year 1996 as required by section 105.20(a)(2)of
the Personal Income Tax Regulations to be treated as resident individuals for
entire taxable year 1996. Therefore, the Petitioners are part-year residents for
taxable year 1996. They were residents from January 1, 1996 through August 17,
1996 when they changed their domicile to Florida, and nonresidents from August
18, 1996 through December 31, 1996.

DATED: March 7, 1997

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.