WEEKEND INSIGHTS: California Residency and Virtual Meetings

This is a weekend roundup of Bloomberg Tax Insights, written by practitioners and featuring expert analysis on current issues in tax practice and policy. The articles featured here represent just a handful of the many Insights published each week. For a full archive of articles, browse by jurisdiction at Daily Tax Report, Daily Tax Report: State, Daily Tax Report: International, Transfer Pricing Report, and Financial Accounting.

This week we look at: proving you’re not a California resident, deducting virtual meeting meals, “unclaimed” IRAs, and more. We’ll hear from:

• Eric Coffill of Eversheds Sutherland on proving you are no longer a California resident
• Marina Vishnepolskaya on deducting meals for virtual employee meetings
• Lacey Stevenson and Hersh Verma of Norton Rose Fulbright on the deduction disallowance for fines and penalties
• Shiv Mahalingham of The Cragus Group on transfer pricing documentation and developments in the Middle East
• Morag Ofili and Daisy Minns Shearer of Harbottle & Lewis on getting divorced in England and Wales

Elon Musk recently changed his residency from California.

Photographer: Britta Pedersen/POOL/AFP via Getty Images

The departures of Elon Musk and Larry Ellison from California have garnered much attention. Many more moves have been less visible. Eric Coffill of Eversheds Sutherland analyzes several recent decisions from the Office of Tax Appeals to see what it takes to prove an actual change in residency. Read: The California Office of Tax Appeals Looks at Residency

The disaster relief legislation that former President Trump signed in late December included a provision that appears to allow employers to deduct meals delivered to employees for virtual meetings. Marina Vishnepolskaya looks at the novel provision intended to help restaurants struggling through the pandemic. Read: Expensing Employee Virtual Meals Under the Taxpayer Certainty Act

Last week, the Internal Revenue Service released the long-awaited final regulations governing the deductibility of fines and similar penalties paid to governmental entities (and certain nongovernmental regulatory entities). Lacey Stevenson and Hersh Verma of Norton Rose Fulbright answer the questions posed by the regulations. Read: Deduction Disallowance for Fines and Penalties and the Corresponding Reporting Requirements

Shiv Mahalingham of The Cragus Group provides a summary of important transfer pricing documentation requirements in the Middle East region for 2021 and adds his on-the-ground experience with developments there. Read: Transfer Pricing in the Middle East in 2021

In the final installment of their three-part series on tax issues related to wealth and marriage, Morag Ofili and Daisy Minns Shearer of Harbottle & Lewis discuss the importance of timing when disposing of and transferring assets under a divorce settlement in England and Wales. Read: Wealth and Marriage: Getting Divorced in England and Wales—Why Timing is Everything

From the Archive

Bloomberg Tax contributors keep track of some less than successful residency changes and explain how to do it right.

The combination of warm weather and no personal income tax makes Florida a desirable place to relocate. Connie Eckerle of Smolin outlined what you need to keep in mind to make a clean break from your current domicile—and its taxes. Read: What You Need to Know About Relocating to Florida

The founder of a software company failed to avoid Massachusetts income tax on the gain from the sale of his company by claiming a change of domicile to Florida. Robert Willens highlighted how going through the “ministerial steps intended to make a show of domicile for the taxing authorities“ wasn’t sufficient. Read: Software Executive Didn’t Abandon Massachusetts Domicile

Did you know that you could be deemed a New York resident by owning a vacation home and commuting to New York City from another state—even though the vacation home is nowhere near the city? Open Weaver Banks, Michael Hilkin, and Peter Hull of Eversheds Sutherland tell how it happened to a New Jersey couple. Read: The Cabin in the Woods—Working and Vacationing in New York Just Got More Expensive

Beyond Tax

What’s happening outside the world of tax?

Will debtors get relief from the autonomous Small Business Administration? The most recent congressional stimulus package provides debtors in bankruptcy with a means of accessing Paycheck Protection Program funding, but it’s unclear whether regulators will ever enable them to receive those funds, say Arent Fox bankruptcy and restructuring attorneys Tal Unrad and James Britton. Read: Expansion of PPP Loans in Covid-19 Relief Package—Will Help Come Soon Enough?

Restoring ethics in the White House is a big task ahead, and President Biden’s selection of new White House Counsel Dana Remus is a strong choice to lead the way, says Richard W. Painter, University of Minnesota Law School professor and former chief White House ethics lawyer under President George W. Bush. He outlines the wide range of Trump administration policies, practices, and legal positions that need to be reversed to restore public confidence in government. Read: Ethics in the Biden White House: A Chance for a New Beginning

Ignoring political events as dangerous as those this month carries risks for Big Law. Michael Gordon, principal of Group Gordon and former Skadden attorney, advises on how law firms should take a position and clearly communicate it. Read: Big Law Should Not Ignore Dangerous Political Events—How to Take a Stand

Balch & Bingham partners Philip Dunlap and David Bowsher highlight three areas for M&A attorneys to be on alert for when closing deals in 2021, including flushing out any problems related to PPP loan documents and workforce issues. Read: Three Things to Watch Out for When Deal Making in 2021

Exclusive Content for Bloomberg Tax Subscribers

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Jerome M. Hesch of Boston University demonstrates how the mortality tables the IRS is required to use increase the financial value of the charitable income tax and gift tax deductions when using charitable remainder trusts. And he shows how the required mortality tables reduce the financial value of charitable deductions when using charitable lead trusts.

Bloomberg Tax Insights articles are written by experienced practitioners, academics, and policy experts discussing developments and current issues in taxation. To contribute, please contact Erin McManus at emcmanus@bloombergtax.com.