Money Dude wrote:

- quote -

In order to avoid the AZ tax, you would have to move both
yourself AND your business to WA. It doesn't matter where
your clients are located; the source of income from this
business is the place where you perform your investment
management services. If you move to WA and perform all your
services there, all of the income will be from a WA source
and none will be subject to AZ tax, even if some of your
clients are in AZ.

Arizona defines a tax resident as a person who is either (a)
present in the state for a purpose that is not temporary or
transitory or (b) domiciled in the state and absent for a
temporary or transitory purpose. A resident who is
temporarily absent from the state remains a resident for tax
purposes. (This is virtually identical to California's
definition.) Owning property and spending more than 6
months in Washington will not make you a nonresident of
Arizona. In order to make an effective move you must change
your domicile from AZ to WA. A change of domicile generally
requires all of three elements: (1) abandonment of the
previous domicile (i.e., physically move away from it); (2)
moving to and residing in a new location; and (3) an intent
to remain in the new location permanently or indefinitely.

The Washington Business & Occupations Tax is measured by
gross receipts, so although the rate is low, the base is
high (gross, not net income). I'm not sure how or whether
it would apply to your type of business, however.

Katie in San Diego

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Money Dude wrote:

- quote -

S-Corps and LLCs (absent a C-corp election) are pass-through
entities. You probably are liable for AZ tax on your actual
AZ income (rents, earnings for work performed in AZ) and the
entities are subject to franchise/corporate income tax with
appropriate allowance for tax paid to WA.

In general it is best to incorporate or to establish a LLC
in the jurisdiction where it has its principal office and
where it does all its business -- if that is a single state.
It is quite straightforward to change the state of
incorporation/LLC establishment. Consult a business lawyer;
s/he may advise a merger of the AZ into a new WA entity.

It does not matter where your clients are located if you
perform all the work in WA. If you have a permanent
establishment and/or perform work in AZ as well, then the
answer can be different.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Thanks much!

Right now about 50% of my clients are WA residents who pay
my AZ S-Corp investment mgmt fees - is there a way to remove
this income from AZ state tax since it is coming from WA
residents? WA has some B&O tax (Business and Organization)
but I believe it is at a very low rate and may not apply.

For moving the business to WA - would I need to abandon my
AZ business physically or just incorporate in WA?

Appreciate your feedback

Rick

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Money Dude wrote:

- quote -

No. Not sufficient. You probably have to re-incorporate in
WA too (to get the source for personal income tax changed).
You definently have to have the business leave AZ to change
the corporate tax filings source.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << If you want a professional tax opinion, you are advised > << to contact a Certified Public Accountant, an Enrolled > << Agent, or a Tax Attorney. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"Money Dude" <rgage[at]stratequity.com> wrote:

- quote -

Chances are that all of your income will be subject to AZ
tax, as it is from flow through entities, regardless of your
residence.

Also, take a good look at the residency (& domicilary)
issues in your state - particularly any court cases on the
issue

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] > > -----> real address on hobokeni or hobokenx <-----

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << If you want a professional tax opinion, you are advised > << to contact a Certified Public Accountant, an Enrolled > << Agent, or a Tax Attorney. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

X-No-Archive:

I have an AZ S-Corp and LLC where most of my income is
derived. Can I keep my house in AZ and move to WA for 6+
months (and transfer all the stuff, i.e. bank accts,
driver's license, vote card, etc.) and avoid paying at least
part of the AZ state income tax?

Thanks!

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >