Residency Audit Risk Assessment: Leaving California Without an FTB Fight

Who a Residency Audit Risk Assessment is for

• People planning a move out of California who want to do it in a way that holds up.
• Recent movers who left in the last few years and want to know how their file looks today.
• Founders and executives moving before a sale, IPO, or large equity vesting.
• Households with ties in two states, such as a second home, family, or a business that stays in California.

The assessment is most valuable before a large income event. That is when residency is worth the most, and when the FTB looks hardest.

How the FTB decides whether you really left

California taxes residents on all of their income, wherever it is earned. Whether you are a resident is a question of facts and circumstances, not a single form or date.

The FTB generally weighs where your closest connections are, including:

• Where you, your spouse, and your children actually spend time.
• Where your homes are, and which one you treat as your primary residence.
• Where you work, run your business, and keep your professional advisors.
• Where your bank accounts, cars, licenses, registrations, and voter registration are.
• Where your doctors, clubs, religious and social ties, and memberships are.

Spending more than nine months of a year in California generally creates a presumption of residency. Spending less does not settle the question, and the burden is generally on you to show you are no longer a resident.

What the assessment covers

We review your situation the way an FTB auditor would, factor by factor. A typical assessment includes:

• Day count: a reconstruction of where you were, supported by records such as travel, phone, and card data.
• Home and property: how your California and out-of-state homes are used, and how that reads to an auditor.
• Family, business, and professional ties that still point to California.
• Paper trail: licenses, registrations, accounts, and filings that should match your new home.
• Timing of income events, such as a sale, bonus, or equity vesting, and how they line up with your move.
• California source income that may stay taxable even after a valid move.

You receive a clear risk picture, a prioritized list of ties to address, and a documentation plan for the years an audit could reach.

Residency, source income, and a business sale

Ending residency is only half the analysis. California can still tax nonresidents on California source income, which can include equity compensation earned while working in the state and some business sale proceeds.

For founders, the stakes are larger. California does not follow the federal QSBS exclusion, so a California resident can owe full state tax on gain that is federally tax-free. Our QSBS Pre-Sale Review addresses the federal side of the same plan.

If the FTB has already opened an audit

A residency audit usually begins with a questionnaire and a request for records. Early answers shape the rest of the case, and they are hard to walk back.

If you have received an FTB residency inquiry, talk with us before you respond. We represent clients through the audit, the protest, and appeals to the Office of Tax Appeals. See how to fight a California residency audit.

How the assessment works

1. Privileged consultation. We discuss your move, your ties, and any income events ahead, under attorney-client privilege.
2. Records review. We review travel and day-count records, property and lease documents, and key accounts and filings.
3. Risk analysis. We evaluate each residency factor the way the FTB would.
4. Action plan. We recommend changes and documentation, timed around your move and any sale.
5. Ongoing support. We can revisit the file before returns are filed and defend it if the FTB audits.

Why clients choose Kugelman Law

California residency experience. Founder Alex Kugelman was quoted in the Financial Times and the New York Post in July 2026 on California’s proposed billionaire tax and the state’s residency audits of departed wealthy residents.

Federal and state together. Otto Bosch, a former IRS Revenue Agent from the IRS Global High Wealth group, brings the federal examination side of a high-net-worth move into the same plan.

Local and remote. We are based in Marin County, with offices in San Rafael, San Francisco, and Irvine, and all representation can be handled remotely after you move.

Related guides

• California residency audit: how the FTB decides if you really left
• Moving out of California without triggering an FTB audit
• How to fight a California residency audit
• California source income after you move
• California billionaire tax (Proposition 40)
• IRS and FTB audit defense

Frequently asked questions

What is a Residency Audit Risk Assessment?

It is a legal review of how your move out of California would look to an FTB auditor. We evaluate each residency factor, identify ties that undercut your move, and build a documentation plan to support it.

How do I prove I moved out of California?

By showing that your closest connections moved with you: where you live, spend your time, work, bank, vote, and keep your family and social ties. Consistent, contemporaneous records carry far more weight than a new driver’s license alone.

How many days can I spend in California after I move?

There is no number that guarantees nonresidency. Spending more than nine months a year in California generally creates a presumption of residency, but fewer days do not prove you left; the FTB looks at all of your ties.

Can I keep my California home?

You can, but a California home kept available for your use is a significant factor in a residency audit. If you keep it, how it is used and documented matters.

Why do residency audits often follow a business sale?

Because the tax at stake is largest then. A move shortly before a large sale or vesting event draws close review, so the move needs to be genuine, well timed, and well documented.

Do I still owe California tax after a valid move?

You may. Nonresidents still owe California tax on California source income, which can include equity compensation earned while working in California and certain business income.

What does a consultation cost?

We offer paid consultations fully protected by attorney-client privilege; we do not offer free consultations. A paid consultation gives you a real analysis of your residency position. Call (415) 968-1780 to schedule.

About our attorneys

Alex Kugelman is the founder and managing attorney of Kugelman Law and a former judicial law clerk at the U.S. Tax Court in Washington, D.C. (2012 to 2014). He has nearly two decades of federal and California tax controversy experience and is admitted in California and before the U.S. Tax Court.

Alex was quoted in the Financial Times and the New York Post in July 2026 on California’s proposed billionaire tax and the state’s residency audits of departed wealthy residents. He also serves on the Marin County Assessment Appeals Board.

Otto Bosch is a tax controversy attorney at Kugelman Law and a former IRS Revenue Agent from the Global High Wealth group of the IRS Large Business & International Division. He is admitted to practice before the U.S. Tax Court and is an IRS Enrolled Agent.

Otto was quoted in Tax Notes in 2026 on IRS examination training and the LB&I audit campaign targeting deferred legal fee structures.

Plan your move with counsel

If you are leaving California, or already have, find out how your file looks before the FTB does.

Schedule a paid, privileged consultation by calling (415) 968-1780 or visiting our contact page.

This page is attorney advertising and general information, not legal advice. California residency is a fact-specific determination under California law. Contacting Kugelman Law does not create an attorney-client relationship.