BEFORE
THE
STATE
BOARD
OF
EQUALIZATION
OF
THE
STATE
OF
CALIFORNIA
In
the
Matter
of
the
Appeal
of
BARRY
H.
KEELING
For
Appellant:
William
P.
Shannahan
Attorney
at
Law
For
Respondent:
Jon
Jensen
Counsel
OPINION
This
appeal
is
made
pursuant
to
section
18593
1
of
the
Revenue
and
Taxation
Code
from
the
action
of
the
Franchise
Tax
Board
on
the
protest
of
Barry
H.
Keeling
against
proposed
assessments
of
additional
personal
income
tax
in
the
amounts
of
$10,042.36
and
$2,057.53
for
the
years
1977
and
1978,
respectively,
and
against
proposed
assessments
of
additional
personal
income
tax
and
penalties
in
the
total
amounts
of
$5,539.72
and
$6,033.00
for
the
years
1979
and
1980,
respectively.
1
Unless
otherwise
specified,
all
section
references
are
to
sections
of
the
Revenue
and
Taxation
Code
as
in
effect
for
the
years
in
issue.
-508-
NO.
82A-1640
Appeal
of
Barry
H.
Keeling
The
major
issue
presented
in
this
appeal
is
whether
appellant
was
a
resident
of
California
for
income
tax
purposes
during
the
period
1977
through
1980.
Appellant
is
a
pilot
who
has
been
employed
with
Trans
World
Airlines
(TWA)
since
April
of
1965.
After
completing
his
flight
training
in
Illinois,
appellant
and
his
wife
moved
to
Los
Angeles
where
appellant
took
up
his
duties
as
a
flight
officer.
In
December
of
1969,
the
Keelings
purchased
a
home
in
La
Jolla,
California.
Appellant
and
his
wife
separated
in
April
of
1976.
Appellant,
as
a
result
of
the
property
settlement,
received
the
La
Jolla
residence
as
well
as
two
California
limited
partnerships.
In
September
of
1976,
appellant
was,
at
his
request,
assigned
by
TWA
to
Saudi
Arabia
where
he
was
to
serve
as
a
flight
instructor.
After
two
months
of
training
in
Colorado,
appellant
left
for
Jedda,
Saudi
Arabia.
Appellant
'
s
contract
provided
that
he
would
remain
in
Saudi
Arabia
for
a
minimum
of
18
months.
He
also
was
provided
with
rent-free
housing.
Before
leaving
California,
appellant
gave
his
friend,
Joseph
E.
Aiken,
his
power
of
attorney.
Mr.
Aiken
has
stated
that
appellant
indicated
to
him
that
because
he
was
recently
divorced
he
was
not
likely
to
return
to
California
after
the
Saudi
Arabia
assignment.
As
Mr.
Aiken
had
previously
acted
as
appellant
'
s
finan
-
cial
advisor,
he
was
instructed
to
handle
appellant
'
s
affairs
as
he
saw
appropriate.
A
joint
bank
account
was
set
up
so
that
Mr.
Aiken
could
pay
the
bills.
Mr.
Aiken
had
a
real
estate
license
so
he
was
to
determine
the
timing
of
the
sale
of
the
La
Jolla
residence.
According
to
Mr.
Aiken,
he
did
not
sell
the
property
because
at
that
time
property
values
were
soaring
with
annual
appre
-
ciation
of
25
to
40
percent.
During
appellant's
absence
from
California,
a
friend
of
Mr.
Aiken's
occupied
appel
-
lant's
La
Jolla
house.
He
paid
no
rent
but
he
did
pay
his
own
utilities
and
acted
as
caretaker
of
the
property.
In
January
of
1978,
appellant
was
assigned
to
New
York
to
fly
the
international
routes.
He
resided
in
London
until
May
of
1979,
when
he
rented
an
apartment
in
New
York.
In
1980,
appellant
moved
to
Las
Vegas,
Nevada,
where
he
commuted
to
New
York
until
March
of
1981,
when
he
was
reassigned
to
Los
Angeles.
Upon
returning
to
California,
appellant
again
resided
at
the
home
in
La
Jolla.
-509-
Appeal
of
Barry
H.
Keeling
Appellant
filed
California
nonresident
returns
in
1977
and
1978,
but
filed
no
California
returns
in
1979
and
1980.
Respondent
determined
that
appellant
was
a
California
resident
during
all
four
years
in
issue
and
proposed
assessments
were
issued
in
February
of
1982.
Respondent
'
s
determination
was
based
on
the
following:
(1)
the
real
property
at
La
Jolla
was
neither
sold
nor
rented;
(2)
a
new
1977
Porsche
911
was
garaged
at
appellant's
La
Jolla
house;
(3)
appellant
periodically
returned
to
California
to
stay
in
the
La
Jolla
house
which
was
occupied
by
a
friend
of
Joseph
Aiken's;
(4)
appellant
continued
to
conduct
his
personal
business
in
California,
such
as
taking
out
a
$5,000
loan
from
California
First
Bank
in
July
of
1979,
and
a
$50,000
loan
from
Crocker
Bank
in
November
of
1980;
(5)
appellant
employed
a
San
Diego
accounting
firm
to
prepare
his
tax
returns;
(6)
appellant
retained
his
California
driver's
license
through
1979;
(7)
appellant
maintained
a
telephone
listing
in
his
name
at
his
La
Jolla
home;
(8)
appellant
returned
to
California
numerous
times
for
medical
examinations,
surgery,
and
other
business;
and
(9)
appellant
claimed
the
residence
at
La
Jolla
as
his
principal
residence
for
purposes
of
obtaining
a
California
homeowner's
property
tax
exemption
through
1979.
Appellant
contends
that
when
he
left
California
for
Saudi
Arabia
he
never
intended
to
return
to
California.
In
support
of
this
position
appellant
points
out
that
once
he
left
his
assignment
in
Saudi
Arabia
he
went
to
London,
then
New
York,
and
finally
Nevada.
Appellant
further
contends
that
he
had
no
family
in
California
to
which
he
could
return
and
he
kept
his
real
property
only
as
a
business
investment.
Finally,
appellant
contends
that
he
built
a
house
in
Illinois,
in
which
his
parents
are
living,
and
that
he
had
bank
accounts
in
Illinois,
-510-
Appeal
of
Barry
H.
Keeling
England,
and
Nevada.
As
to
the
issue
concerning
the
homeowner's
exemption,
appellant
has
stated
that
he
did
not
receive
the
notice
of
homeowner
exemption
sent
out
by
the
county
assessor
and,
therefore,
did
not
realize
his
error
until
July
1,
1979,
when
he
had
the
exemption
removed.
Section
17041
imposes
a
tax
on
the
entire
tax
-
able
income
of
every
resident
of
this
state.
Therefore,
the
wages
earned
by
appellant
while
absent
from
California
are
taxable
to
appellant
if
he
remained
a
California
resident
during
that
absence.
Section
17014,
subdivision
(a)
,
defines
the
term
"resident"
as
including:
"(2)
Every
individual
domiciled
in
this
state
who
is
outside
the
state
for
a
temporary
or
transitory
purpose."
Under
the
terms
o
f
this
statute,
appe
llan
t
was
a
resident
of
California
for
tax
purposes
if
(1)
he
continued
to
be
a
domiciliary
during
his
absence,
and
(2)
this
absence
was
for
a
temporary
or
transitory
purpose.
Since
appellant
does
not
contend
that
he
did
not
remain
a
California
domiciliary
during
his
absence,
we
need
only
determine
whether
or
not
his
absence
from
California
was
for
a
temporary
or
transitory
purpose.
Respondent
'
s
regulation
explains
that
whether
a
taxpayer's
purpose
in
entering
or
leaving
California
is
temporary
or
transitory
in
character
is
essentially
a
question
of
fact
to
be
determined
by
examining
all
the
circumstances
of
each
particular
case.
(Cal.
Admin.
Code,
tit.
18,
reg.
17014,
subd.
(
b
);
Appeal
of
Anthony
V.
and
Beverly
Zupanovich
,
Cal.
St.
Bd.
of
Equal.,
Jan.
6,
1976.)
The
regulation
further
explains
that
the
underlying
theory
of
California's
definition
of
"resident"
is
that
the
state
with
which
a
person
has
the
closest
connections
is
the
state
of
his
residence.
(Cal.
Admin.
Code,
tit.
18,
reg.
17014,
subd.
(b)
,
supra.)
In
accordance
with
this
regulation,
we
have
held
that
the
connections
which
a
taxpayer
maintains
with
this
and
other
states
are
an
important
indication
of
whether
his
presence
in
or
absence
from
California
is
temporary
or
transitory
in
character.
(Appeal
of
Richards
L.
and
Kathleen
K.
Hardman,
Cal.
St.
Bd.
of
Equal.,
Aug.
19,
1975.)
Some
of
the
contacts
we
have
considered
relevant
are
the
maintenance
of
a
family
home,
bank
accounts,
business
relationships,
possession
of
a
local
driver's
license,
and
ownership
of
real
property.
These
contacts
are
important
both
as
a
measure
of
the
benefits
and
protection
which
the
taxpayer
has
received
from
the
laws
and
government
of
California,
and
also
as
an
objective
indication
of
whether
the
taxpayer
entered
or
left
the
state
for
temporary
or
transitory
purposes.
-511-
Appeal
of
Barry
H.
Keeling
(
Appeal
of
Jeffrey
L.
and
Donna
S.
Egeberg,
Cal.
St
.
Bd
.
of
Equal.,
July
30,
1985.)
Using
the
above-referenced
guidelines,
we
find
no
reason
to
conclude
that
appellant
was
outside
of
California
for
other
than
a
temporary
or
transitory
purpose.
While
appellant
did
have
housing
provided
for
him
in
Saudi
Arabia
and
did
work
in
Saudi
Arabia
from
September
of
1976
to
January
of
1978,
the
only
substan
-
tial
connections
he
kept
were
with
California.
Quite
clearly
the
burden
of
proof
is
on
appellant
to
show
that
respondent's
determination
of
tax,
which
is
presumed
to
be
correct,
is,
in
fact,
erroneous.
(Todd
v.
McColgan,
89
Cal.App.2d
509
[201
P.2d
414]
(1949).)
Appellant
has
not
shown
that
his
connections
with
any
other
location
were
greater
than
his
connections
with
this
state.
Rather,
appellant
kept
a
telephone
listing
and
a
car
in
La
Jolla;
he
returned
to
California
many
times
for
his
medical
and
business
needs;
he
claimed
the
California
homeowner's
exemption
on
his
La
Jolla
property
2
;
and
he
did
not
lease
or
sell
his
La
Jolla
home.
When
appellant
was
in
New
York
and
Las
Vegas,
he
shared
apart
-
ments
and
does
not
appear
to
have
established
many
connections
with
either
area.
Given
the
nature
of
appel
-
lant
'
s
employment
and
the
ease
with
which
he
could
travel
great
distances,
we
must
conclude
that
even
though
his
job
was
not
based
in
California,
he
kept
his
most
substan
-
tial
contacts
with
this
state.
Consequently,
appellant's
purpose
for
being
outside
of
California
was
temporary
or
transitory
and
he
continued
to
be
a
resident
during
the
years
in
issue.
The
action
of
respondent
must
be
sustained.
We
note
that
the
amounts
assessed
for
the
years
1979
and
1980
include
penalties
for
failure
to
file
a
return
and
for
failure
to
furnish
requested
information.
Section
18681
imposes
a
penalty
when
a
taxpayer
fails
to
file
a
return
by
the
due
date
unless
it
can
be
shown
that
the
failure
was
due
to
reasonable
cause
and
was
not
due
to
willful
neglect.
Appellant
contends
that
2
California's
Constitution
in
subdivision
(k)
of
section
3
of
article
XIII
provides
that
a
homeowner's
exemption
may
be
taken
only
when
the
property
is
occupied
by
an
owner
as
his
principal
residence.
Revenue
and
Taxation
Code
section
218
further
provides
that
the
exemption
does
not
extend
to
property
which
is
the
owner's
secondary
home.
-512-
Appeal
of
Barry
H.
Keeling
ORDER
Pursuant
to
the
views
expressed
in
the
opinion
of
the
board
on
file
in
this
proceeding,
and
good
cause
appearing
therefor,
IT
IS
HEREBY
ORDERED,
ADJUDGED
AND
DECREED,
pursuant
to
section
18595
of
the
Revenue
and
Taxation
Code,
that
the
action
of
the
Franchise
Tax
Board
on
the
protest
of
Barry
H.
Keeling
against
proposed
assessments
of
additional
personal
income
tax
in
the
amounts
of
$10,042.36
and
$2,057.53
for
the
years
1977
and
1978,
respectively,
and
against
proposed
assessments
of
addi
-
tional
personal
income
tax
and
penalties
in
the
total
amounts
of
$5,539.72
and
$6,033.00
for
the
years
1979
and
1980,
respectively,
be
and
the
same
is
hereby
sustained.
Done
at
Sacramento,
California,
this
9th
day
of
October,
1985,
by
the
State
Board
of
Equalization,
with
Board
Members
Mr.
Dronenburg,
Mr.
Collis,
Mr.
Bennett,
Mr.
Nevins
and
Mr.
Harvey
present.
*For
Kenneth
Cory,
per
Government
Code
section
7.9
-
514-
Ernest
J.
Dronenburg,
Jr.
,
Chairman
Conway
H.
Collis
,
Member
William
M.
Bennett
,
Member
Richard
Nevins
,
Member
Walter
Harvey*
,
Member