What is tax equity investment?

Can I reduce my state tax on long-term capital gains by selling equity investments before moving from a state with no income tax to California?

• I am relocating from Washington to California. Should I sell my equity investment right before the move to reduce the state tax on long-term capital gains?

• Answer:

  As has been mentioned in a number of other places (for example, ), California is very aggressive in its pursuit of people who leave the state with the intention of avoiding taxes but who maintain some form of residential tie to the state. California takes an expansive definition of what it means to be a resident of the state, and if you've done anything to create residential ties between yourself and the state before you dispose of the investment, California may very well take the tack that those actions establish California residency and therefore your gain is taxable in California. So if you intend to do this, you need to maintain detailed documentation that shows that you disposed of the investment before you established any residential ties to the state of California.