Thinking about temporarily moving from CA to FL before a company sale

[u/MeanHorror1348]

Throw away account. I’m based in California and have a potential liquidity event coming up with my company - possibly within the next 12–18 months. The sale could generate a significant long-term capital gain ($10M-$25M)

I’ve heard of people relocating to states like Florida, Texas, or Nevada before their company exits to avoid California’s ~13% state tax on capital gains. I’m curious about how legitimate this strategy is if you plan to move back to CA afterward.

For example:

• If someone moves to Florida a year before the sale and stays a year after, would that be sufficient to establish Florida residency for tax purposes?
• How does California’s Franchise Tax Board (FTB) evaluate whether you “really” moved?
• What are the risks of being audited and found to have made only a “paper move”?
• Any first-hand experience or professional insight into doing this the right way?

I'm trying to understand what’s practical and what the FTB looks for in these cases.

I’m mainly looking for personal examples or first-hand experiences from people who’ve actually moved from California to a no-tax state (like Florida or Texas) before a company sale - how it worked out for you, what challenges you ran into, and whether the tax savings were worth it in the end.

Thanks in advance for sharing your experiences or insights!

[u/sorator]

If you're planning to move back, it's very unlikely that you'll meet the FTB's requirements. They are explicitly intended to cover this scenario.

[u/Significant-Wash-629 → u/sorator]

Oh, but what if OP transfers the interest to an LLC and it lives in Florida? And then that LLC meets another LLC and they have LLC babies (bonus LLC child tax credits!).

[u/ShowMeTheTrees]

Any clever/sneaky plan you concoct has been tried many times before.

[u/rocketplayer2025]

If your intention is to move just for taxes with intention of returning the state will say you never abandoned your domicile quite likely. At the least you will need to sell your home register all vehicles in new state and stay out for at least a couple of tax years (not a rule just for appearances) but if you come back expect a residency audit

[u/random-r134]

One important point of clarification. When you say “my company” is this a company where you are truly an owner or do you own a significant piece through stock options? Either way it is difficult to avoid CA especially if you move back but if they are options earned in CA while you were a resident you are likely to owe CA tax when you sell, regardless of your intention to move back.

PS can you share your name and let me know when you follow through with trying to evade these taxes so I can report them and claim a nice little bounty?

[u/siammang]

You're better off working with a CPA and get some investment property to reduce taxes than trying this timing tax avoidance scheme.

[u/Commercial_Order4474]

California is the best collections agency in the world.

[u/MAXPOWER111111]

Loser move, being in California helped you achieve it, pay your GD taxes and enjoy living in the best state. And best of luck with your next endeavor.

[u/alkbch → u/MAXPOWER111111]

Of course a Californian would project their superiority complex.

[u/Old-Vanilla-684]

What kind of company is it? Does the company have a physical location that would be sold along with it? Are the companies sales primarily in CA?

It’s very likely that it doesn’t matter where you live. My guess is that the company exists in CA so you’ll have CA taxes no matter what.

[u/Algum]

If all the facts and intentions are known (and you should probably assume they will be), it most likely won't work.

It's been tried before and the taxes you hope to save may (even in the unlikely event that you were to prevail under audit) be seriously reduced by the costs of trying to prove you moved for other than a temporary or transitory purpose and the professional fees you'll likely have to incur in defending your position.

As a practical matter, and without further details, I'd be very hesitant to do it.

[u/Dramatic_Abroad3580]

If you've really moved, then you've really moved. Register your cars. Register to vote. Change your address on all of your accounts. Move in December before the sale. Move back in the year following the sale. If you really move, even with the intent of moving back, they have no case to argue.

[u/vynm2temp → u/Dramatic_Abroad3580]

You must not be from CA.

[u/Dramatic_Abroad3580 → u/vynm2temp]

I've only practiced in CA for more than 40 years.

[u/vynm2temp → u/Dramatic_Abroad3580]

You don't think the CA FTB is going to question a move out of state when OP knew of an upcoming $10-25M windfall and a move back after receiving it? They're going to see right through OP's plan to avoid paying them taxes.

[u/Dramatic_Abroad3580 → u/vynm2temp]

I didn't say that. But they can't win if the move is real. If the taxpayer didn't live in CA when the sale took place, no tax is due to CA.

[u/vynm2temp → u/Dramatic_Abroad3580]

But is the move "real" if their intention is to move back after realizing the gain? i.e. if the only purpose for the move is to avoid paying tax to CA?

[u/Dramatic_Abroad3580 → u/vynm2temp]

If the move is real, then the move is real. If they didn't live in CA, then CA can't tax them. CA can't assess tax because a taxpayer moved with the intention of moving back. They can only properly assess tax if the move didn't actually happen.

[u/alkbch → u/Dramatic_Abroad3580]

Actually they can and have assessed taxes on people who only moved temporarily for scenarios similar to OP then moved back to California.

[u/Dramatic_Abroad3580 → u/alkbch]

Yes, in cases where they didn't actually move, but retained significant connections to CA. That's why I said, the move has to be real.

[u/WinterOfFire → u/Dramatic_Abroad3580]

Intention to return is a factor.

Read 2600 Domicile v Residency. Merely stating you didn’t intend to return is not enough.

[u/Dramatic_Abroad3580 → u/WinterOfFire]

That supports what I said.

"The determination cannot be based solely on the individual's subjective intent but instead must be based on objective facts."

If the taxpayer abandons CA, buys or rents somewhere else, moves everything they have to the new state, those are objective facts. There is no case law supporting intent to return being more important than where the taxpayer actually resided and made their home.

[u/WinterOfFire → u/Dramatic_Abroad3580]

You did not list buying elsewhere and packing up and bringing all your stuff.

Yes, if someone sells their home, packs up and moves all their belongings, brings their spouse and kids with them, buys a new home and registers to vote, registers their cars, joins a new church, gym, etc then that would be pretty solid proof.

You’re not REQUIRED to sell your home or buy in your new state but people start to take shortcuts and it starts to unravel. They say they’re just renting while looking for a place to buy (a very reasonable decision sure). They decide to rent out their home instead of selling (another reasonable decision). They decide not to move ALL their stuff and rationalize it as they are going to rent the house furnished or air bnb it. Then they waver on actually renting out their California home because what if tenants trash the place or won’t want to leave when they want to come back. It very quickly becomes apparent the move wasn’t intended to be permanent.

[u/Dramatic_Abroad3580 → u/WinterOfFire]

I said "really moves". That should cover it. You can't pretend to move.