Should I Stay or Should I Go Business Relocation Webinar

1. withum.com SHOULD I STAY OR SHOULD I GO? Relocating Your Business to Florida

2. withum.com W E L C O M E TO Orlando Economic Partnership | Orlando. You don't know the half of it.®

3. withum.com orlando.org Source: U.S. Census Bureau, Annual Estimates of the Resident Population as of July 1 2014

4. withum.com Net Migration into Florida Source: Emsi & IRS, 2018 Net Migration into Florida 500+ RESIDENTS ADDED TO ORLANDO’S POPULATION EACH WEEK (U.S. Census Bureau, Population Division 2018-19)

5. withum.com COVID-19 Employment Impact -10.3 -9.04 -8.93 -8.56 -8.43 -7.75 -7.71 -5.98 -5.93 -4.58 -12.0 -10.0 -8.0 -6.0 -4.0 -2.0 0.0 NY MA VT NH RI NJ PA USA CT FL Percent Change Job Loss by State Year over Year, December 2020 Source: Arizona State University, Seidman Research Institute

6. withum.com 8.6M+ POPULATION WITHIN A 2-HOUR DRIVE (ESRI, 2019) 21.4M FLORIDA POPULATION (US Census, ACS 2019)

7. withum.com 20% 20% OF OUR EMPLOYMENT IS IN LEISURE AND HOSPITALITY (Florida DEO, Employment Statistics 2019)

8. withum.com 80% 80% OF OUR EMPLOYMENT IS IN DIVERSE INDUSTRIES (Florida DEO, Employment Statistics 2019) … but we’re more corporate than you think.

9. withum.com 54% OF RESIDENTS ARE MILLENNIALS AND YOUNGER Orlando MSA Population By Age Cohort Generations breakdown defined by ESRI Source: ESRI 2019 37.3 MEDIAN AGE OF THE ORLANDO REGION (U.S. Census Bureau, 2019) 5% 22% 27% 20% 20% 6% Generation Alpha Generation Z Millennial Generation X Baby Boomer Silent & Greatest Generations

10. withum.com Highest marks in the last 3 YEARS for inclusivity of LGBT community (Human Rights Campaign’s Municipal Equality Index) Source: American Community Survey, 2019 U.S. Census, Population Division, Components of the Resident Population Change Orlando — A welcoming community for all races and ethnicities e

11. withum.com Orlando Economic Partnership | Orlando. You don't know the half of it.® Talent in Orlando.

12. withum.com Orlando MSA New York MSA Boston MSA USA Occupation Average 5 Year Growth Average 5 Year Growth Average 5 Year Growth Average 5 Year Growth Architecture and Engineering Occupations 7.4% -1.7% 0.8% 1.7% Production Occupations 4.5% -5.0% -3.3% -2.4% Business and Financial Operations Occupations 9.1% 0.3% 2.8% 3.2% Management Occupations 8.9% 0.7% 3.2% 2.6% Computer and Mathematical Occupations 11.7% 3.1% 7.0% 7.0% Construction and Extraction Occupations 8.1% -0.3% 0.6% 2.5% orlando.org Orlando got talent. Source: JobsEQ, Data as of Q3 2020

13. withum.com (2 Driving Hours) 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 Orlando Austin Atlanta Dallas Charlotte Raleigh Source: JobsEQ, 2018-2019 Annual Graduates

14. withum.com 632,000 HIGHER-ED STUDENTS WITHIN 100 MILES (2 HOUR DRIVE) OF ORLANDO (JobsEQ, 2018-2019 academic year) 43% OF RESIDENTS 25+ HAVE A COLLEGE DEGREE (U.S. Census Bureau, 2019) No. 1 BEST STATE FOR HIGHER EDUCATION (U.S. News & World Report, 2017-2019)

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16. withum.com America’s most visited destination is also one of the most connected. Orlando Economic Partnership | Orlando. You don't know the half of it.® Access in Orlando.

17. withum.com Orlando International Airport +$4.2B 50M PASSENGERS A YEAR +$3.5B CONNECTING ORLANDO INTERNATIONAL AIRPORT TO MIAMI +$800M 61 MILES OF RAIL 16 STOPS Port Canaveral +$345M +$2.3B INTERSTATE 4 Improvement Project ONLY HUMAN SPACE LAUNCH center in U.S.

18. withum.com Orlando Sanford International Airport Orlando International Airport Kissimmee Gateway Airport Orlando Executive Airport Leesburg International Airport Daytona Beach International Airport Port Canaveral Port Tampa Bay Kennedy Space Center Orlando Melbourne International Airport Tampa International Airport Port Manatee Clearwater International Airport

19. withum.com 175+ NONSTOP DESTINATIONS ORLANDO TO THE WORLD 183 WEEKLY DIRECT FLIGHTS TO NEW YORK METRO TOP 10 AIRPORT IN THE U.S. BY PASSENGER TRAFFIC 50M PASSENGERS ANNUALLY

20. withum.com Orlando Economic Partnership | Orlando. You don't know the half of it.® Industry in Orlando.

21. withum.com Source: JobsEQ, Data as of Q3 2020 Occupations ORLANDO MSA New York MSA Boston MSA National Average Architecture and Engineering Occupations $79,900 $96,500 $98,000 $88,800 Production Occupations $35,800 $42,600 $45,300 $40,200 Business and Financial Operations Occupations $69,400 $100,900 $90,900 $78,500 Management Occupations $103,600 $161,000 $140,400 $117,800 Computer and Mathematical Occupations $82,200 $107,100 $102,500 $93,800 Construction and Extraction Occupations $41,900 $69,600 $65,100 $52,000 32% MORE AFFORDABLE TALENT IN ORLANDO THAN NEW YORK (JobsEQ, Q32020) 14% MORE AFFORDABLE TALENT IN ORLANDO THAN USA (JobsEQ, Q32020) No. 2 BEST STATE FOR BUSINESS (Chief Executive Magazine, 2020)

22. withum.com orlando.org Source: Cushman & Wakefield, Office MarketBeat Q4 2020 68% More Affordable Real Estate in Orlando than New York (C&W, Q42020) $24.36 $24.50 $26.68 $27.06 $28.15 $29.62 $30.81 $37.66 $42.43 $77.06 Orlando Las Vegas Dallas Raleigh Phoenix Denver Portland Boston Austin New York (Midtown) Office Space Average Asking Rent, Q4 2020 ($psf/year) 35% More Affordable Real Estate in Orlando than Boston (C&W, Q42020)

23. withum.com Source: National Association of Realtors, Q3 2020 (projected) 47% More Affordable Homes in Orlando than Boston $310,000 $479,900 $588,100 $349,800 $313,500 Orlando New York City Boston Northeast United States Median Sales Price of Existing Single-Family Homes 35% More Affordable Homes in Orlando than New York City

24. withum.com ORLANDO, Florida New York, New York Boston, Massachusetts 93.9 Cost of Living Index1 237.0 Cost of Living Index 148.4 Cost of Living Index No. 4 State Business Tax Climate Ranking2 No. 48 State Business Tax Climate Ranking No. 34 State Business Tax Climate Ranking 4.458% State Corporate Income Tax Rate2 6.50% State Corporate Income Tax Rate 8.00% State Corporate Income Tax Rate None State Individual Income Tax Rate2 8.82% State Individual Income Tax Rate 5.00% State Individual Income Tax Rate 6.5%-7.5% Combined State and Local Sales Tax Rate2 8.52% Combined State and Local Sales Tax Rate 6.25% Combined State and Local Sales Tax Rate Source: 1Council for Community and Economic Research, 2020 Annual Average; 2Tax Foundation, 2021

25. withum.com orlando.org Source: Cushman & Wakefield, Office MarketBeat Q4 2020 Balanced budget Florida's legislature is required to pass a balanced budget. Florida’s fiscal stability. 4 6 27 34 43 47 48 50 Florida New Hampshire Pennsylvania Massachusetts Vermont Connecticut New York New Jersey Tax Foundation rankings

26. withum.com orlando.org Source: National Oceanic and Atmospheric Administration’s National Centers for Environmental Information, 2021

27. withum.com Technology Delivery Center Est. 2014 Expanded 2016 and 2018 2,200+ New Jobs in Central Florida $61M Capital Investment Est. 1957 8,000 Total Employees Expanded in 2006, 2018, 2019 Missiles and Fire Control (MFC) 2,000+ New Jobs $760M Capital Investment Est.2015 Regional Office 1,600 New Jobs $28M Capital Investment Johnson & Johnson Human Performance Institute ® 34,480-square-foot facility KPMG’s Global Training Center, “The Lakehouse” $450M Capital Investment 800,000 square feet 40,000+ KPMG employees visit per year Verizon Center of Excellence Est. 2016 $63M Capital Investment 1,100 New Jobs

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30. withum.com 500+ RESIDENTS ADDED TO ORLANDO’S POPULATION EACH WEEK (U.S. Census Bureau, Population Division 2018-19) No. 1 METRO IN THE NATION FOR JOB GROWTH 2015 - 2018 (U.S. Bureau of Labor Statistics) Orlando is your best Value. STRONG TALENT PIPELINE TOP-RANKED INFRASTRUCTURE AFFORDABLE & QUALITY REAL ESTATE TOP-ENVIRONMENT FOR BUSINESS AFFORDABLE & QUALITY LABOR

31. withum.com Location Evaluation Services The Partnership serves as our region’s single point of contact for business location or expansion. Confidential Project Management Assistance Site Selection Assistance In-Depth Market Data Community Connections The Orlando Economic Partnership (the Partnership) offers a full range of services to businesses looking to locate or expand in the Orlando area with a staff of business development experts who can assist in everything from site location analysis to evaluation of financial assistance.

32. withum.com W E L C O M E TO Orlando Economic Partnership | Orlando. You don't know the half of it.®

33. withum.com Casey Barnes, CEcD Casey.Barnes@orlando.org THANK YOU!

34. withum.com SHOULD I STAY OR SHOULD I GO? Relocating Your Business to Florida

35. withum.com BE IN A POSITION OF STRENGTH SM Moderator: Stuart McCallum ASA, Partner smccallum@withum.com Peter Hilera CPA, Tax Partner philera@withum.com Jonathan Weinberg JD, LL.M, SALT Senior Manager jweinberg@withum.com Barry H. Horowitz CPA, MST, SALT Partner & Market Leader bhorowitz@withum.com Monica Jalife Withum Wealth Management CFA, CFP®, MBA mjalife@withumwealth.com Elena Ladygina Withum Wealth Management CFP®, Wealth Advisor eladygina@withumwealth.com

36. withum.com WEALTH MANAGEMENT PERSPECTIVE

37. withum.com Withum Wealth FIDUCIARY Client First Approach Conflict-Free Advice Straight Forward Solutions Wealth advisory, multi-generational and financial planning services

38. withum.com Market Landscape

39. withum.com A Brief Recap of 2020 Coronavirus pandemic upended the global economy Volatile year with similarities to other periods in history all in one • Fastest bear mkt decline since 1933 (16 trading days) • Fastest Round trip – 181 calendar days (High, -20%, New Highs) • From 2/19 high to 3/23 low S&P500 lost -33.9% Dichotomy in the market and real economy Market recovery driven by a handful of names • Recently the participation has broadened

40. withum.com Looking Forward • Improving economic growth/corporate earnings • Prospect for improved trade relations • Strong housing continues • Pent-up demand should help recovery • Inflation could surprise to the upside • Meaningful GDP increases expected • Additional fiscal stimulus expected • Reopening trade should benefit as vaccine rolls out • Rotation in market leadership • Lower dollar benefits international equities

41. withum.com The Biden Agenda • Increase corporate tax rate to 28% • Increase personal top tax rate to 39.6% • Revert Estate tax exemption to $5.49M - perhaps it will fall somewhere in between current $11.6 and $5.49M • Phase out 20% business deduction • Eliminate preferential capital gains and dividend treatment for high earners • Tax unrealized gains at death (no step-up cost basis) • Introduce Social Security doughnut hole • Economic impact could be lessened if spending outpaces taxation

42. withum.com The Biden Agenda could benefit • Infrastructure • Education • Cannabis legalization • Renewable/ clean energy • Green stocks • Small Cap Names • Cyclical • Industrials

43. withum.com Planning Ahead

44. withum.com Multi-Year Macro Outlook Cyclical View (0-2 year outlook): Opportunistic & Defensive Growth Oriented •Monetary policy likely to remain unchanged. •Further fiscal stimulus expected. •Fixed income yields to remain low. •Bonds’ ability to diversify is lower than in the past. •Dichotomy within industries. •Higher levels of volatility in the equity markets. •Potential higher upside in the areas poised to benefit from the economic recovery Structural View (2-5 year outlook): Rotational Themes Develop •COVID-19 should be in the rearview mirror. •GDP growth (and inflationary pressures) may become more apparent. •Term structure of interest rates should begin to rise. •Expect market breadth to expand. •Expect stocks to outperform fixed income. •Expect deficits and state pension obligation to become a growing concern. Long Term View (5-10 year outlook): Diversification Enhances Risk-Return Profile •Expect stocks to outperform fixed income. •However, current US Equity P/E multiples suggest below average longer-term returns. •Expect a negative imbalance with respect to the return/risk profile of a traditional long only portfolio. •Similar to the decade ending 12/31/2010, asset class diversification may prove very beneficial.

45. withum.com What will matter… • The market will be much higher over time • Timing is meaningless, but time is everything • Downside management absolutely matters • Traditional fixed income benefits and opportunities are dramatically lower than anytime in the past 40 years • Opportunistic and disciplined investing is paramount • Tax sensitivity will become increasingly important • A smoother ride can equate to greater wealth accumulation • Core investible assets should have an “all-weather approach”

46. withum.com Estate Planning Considerations

47. withum.com Have an Estate Plan

48. withum.com Should I Update My Estate Plan? Properly executed wills and trusts are usually valid in another state, BUT BUT BUT… • References to the laws of previous states can create complications • Heirs might need to rely on laws of another state to establish validity • Opinions from attorneys in two separate states might be needed • Is your Will self-proved? Otherwise, a witness to the Will also needs to certify execution was properly executed State Level Estate taxes differences • Pay attention if moving from a state that has an Estate or Inheritance Tax Named Executors – should meet specific state qualifications • Personal representative should be Florida resident and/or related by blood

49. withum.com Items to consider PLAN NOW! Updating will and trusts documents indicate intent to make the new state legal domicile Work with a wealth advisor to review your investment strategy. Do changes in domicile trigger new income tax considerations? Review account titling and beneficiaries Review titling of asset if moving into or out of a community property states Do you comply with Florida’s laws? • Durable Power of Attorney • Advance Health Care Directives are very state specific • Homestead laws are very Florida specific

50. withum.com Disclosure Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Withum Wealth Management (WWM), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from WWM. Please remember to contact WWM in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. WWM is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the WWM current written disclosure statement discussing our advisory services and fees is available for review upon request.

51. withum.com South Florida Luxury Condos Being Scooped Up By Relocating New Yorkers Looking To Save On Taxes

52. withum.com Out-of-State Buyers Flock to Miami

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54. withum.com The state of New Jersey just signed its own death warrant Simon Black July 6, 2018 Sovereign Valley Farm, Chile You would think New Jersey would have learned its lesson… Two years ago, New Jersey’s richest resident – hedge fund billionaire David Tepper – decided to move himself and his business to Miami Beach. Tepper, who personally earned more than $6 billion from 2012-2015, was tired of paying New Jersey’s top income-tax rate of 8.97% for the 20 years he lived there, in addition to the country’s highest property taxes, the estate tax and inheritance tax. By moving to Florida, a state with ZERO income tax, Tepper stood to save hundreds of millions of dollars each year. And, as an added bonus, he’d be living in the Sunshine State. Anyone with some common sense would have at least acknowledged the possibility that a guy like Tepper would consider moving to save a few hundred million bucks. But New Jersey, content on milking its ultra-wealthy for tax revenue, was caught completely by surprise. And Tepper’s departure left an enormous hole in its budget. Think about that: the departure of literally ONE person caused big problems for New Jersey’s budget. And Tepper wasn’t the only one leaving… According to the New Jersey Business and Industry Association, the State of New Jersey lost a whopping 2 million residents between 2005 and 2014, earning a combined $18 billion in net adjusted gross income, i.e. income that would have been taxed by the state.

55. withum.com 0 Jim Bartek Tax Partner – State and Local Tax WithumSmith+Brown, PC

56. withum.com Top 10 Most Business Friendly States 1. Wyoming 2. Alaska 3. South Dakota 4. Florida 5. Montana 6. New Hampshire 7. Oregon 8. Utah 9. Nevada 10. Indiana

57. withum.com Bottom 10 Least Business Friendly States 41. Vermont 42. Ohio 43. Minnesota 44. Louisiana 45. Iowa 46. Arkansas 47. Connecticut 48. New York 49. California 50. New Jersey

58. withum.com What Makes a State Good for Business? “The absence of a major tax is a common factor among many of the top ten states. Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes:  the corporate income tax; • Wyoming, Nevada, and South Dakota have no corporate or individual income tax (though Nevada imposes gross receipts taxes);  the individual income tax, or • Alaska and Florida has no individual income  the sales tax. • Alaska, New Hampshire, Montana, and Oregon have no sales tax. This does not mean, however, that a state cannot rank in the top ten. While still levying all the major taxes Indiana and Utah, for example, levy all of the major tax types, but do so with low rates on broad bases. (http://taxfoundation.org/)

59. withum.com What Makes a State Bad for Business? The states in the bottom 10 tend to all have complex, nonneutral taxes with comparatively high rates. • New Jersey, for example, is hampered by some of the highest property tax burdens in the country, recently implemented the second highest-rate corporate income tax in the country, levies an inheritance tax, and maintains some of the nation’s worst-structured individual income taxes.

60. withum.com 0 WithumSmith+Brown, PC | BE IN A POSITION OF S S M TRENGTH

61. withum.com 0 WithumSmith+Brown, PC | BE IN A POSITION OF S S M TRENGTH

62. withum.com RESIDENCY CONCEPTS AND ENFORCEMENT ISSUES

63. withum.com Where New Yorkers Moved to Escape Coronavirus Mail forwarding requests from NYC in March: 56,000 Mail forwarding requests from NYC in April: 81,000 Number of requests are more than double the year prior

64. withum.com The Tax Man Knows Where You Live

65. withum.com Should I Stay or Should I Go?

66. withum.com Determining Residency  The states possess and exercise the power to tax their residents’ personal income, regardless of its source  They are constitutionally restrained from taxing nonresidents’ personal income, except insofar as it is derived from sources within the state  The determination of a taxpayer’s residence is therefore a crucial factor in delimiting the extent of a taxpayer’s personal income tax liability  Although the state statutes vary in their definition of “resident,” most of the states rely on one or more of the following factors, either individually or in combination with one another, in determining whether a taxpayer is a resident of the state: • (1) domicile in the state; • (2) presence in the state for other than a temporary or transitory purpose; • (3) presence in the state for a specified period; and • (4) maintenance of a permanent place of abode in the state.

67. withum.com Other States State Determining Residency CA Over 9 months CT Over 183 days IL Prior year resident presumed to be a resident if present in Illinois more days than in any other state during year MI At least 183 days GA 183 days or part-days or longer OH Over 212 contact periods Northeastern States State Determining Residency MA Over 183 days MN At least 183 days MD 183 days or more NJ Over 183 days NY Over 183 days PA Over 183 days Retirement States State Determining Residency AZ Over 9 months FL N/A NC Over 183 days SC Not Applicable TX N/A Sample of Residency Requirements Throughout the U.S.

68. withum.com Sample Lee County, FL Declaration of Domicile

69. withum.com New Jersey Definition(s) of Residency New Jersey  New Jersey defines a resident as an individual is considered a resident of New Jersey if the person is domiciled in New Jersey or maintains a permanent place of abode in New Jersey and, in the aggregate, spends more than 183 days of the taxable year in New Jersey.

70. withum.com Compared to Other States New York  New York defines a resident as an individual who may be a resident of New York state for personal income tax purposes, and taxable as a resident, even though such individual would not be deemed a resident for other purposes. • An individual will be considered a New York resident if he or she meets one of two tests:  if the individual is domiciled in New York, or  the individual maintains a permanent place of abode in New York and, in the aggregate, spends more than 183 days of the taxable year in New York

71. withum.com Compared to Other States Georgia:  Georgia defines a resident as a person who fulfills the specified conditions. Ga. Code Ann. §48-7-1(10).  Georgia defines a resident as an individual who: • is a legal resident of Georgia on the last day of the year; • resided in Georgia on a more or less regular or permanent basis during the year (i.e., the individual was not in the state on a temporary or transitory basis) and who resides in Georgia on the last day of the year; • on the last day of the year has been residing within Georgia for 183 days or part-days or longer, in the aggregate, of the immediately preceding 365 day period; • having become a resident of Georgia, is deemed to continue to be a resident of Georgia until the person shows to the satisfaction of the commissioner that he has become a legal resident or domiciliary of another state; and • becomes a resident of Georgia for the first time during the year, but was a resident for less than 183 days, is a resident only from the date of becoming a resident on an apportionment basis. Ga. Code Ann. §48-7-1(10). Pennsylvania  Pennsylvania defines a resident as an individual who is domiciled in Pennsylvania and spend at least 30 days in the state.  Individuals who are not domiciled in Pennsylvania, but spend over 183 days in the state, are presumed to be residents.

72. withum.com Compared to Other States Property Tax Definition (Florida Statutes, Chapter 196, TAXATION AND FINANCE)  Property Tax; homestead exemption - 196.015 Permanent residency  Intention to establish a permanent residence in this state is a factual determination to be made, in the first instance, by the property appraiser. Although any one factor is not conclusive of the establishment or nonestablishment of permanent residence, the following are relevant factors that may be considered by the property appraiser in making his or her determination as to the intent of a person claiming a homestead exemption to establish a permanent residence in this state:  (1) A formal declaration of domicile by the applicant recorded in the public records of the  county in which the exemption is being sought.  (2) Evidence of the location where the applicant’s dependent children are registered for school.  (3) The place of employment of the applicant.  (4) The previous permanent residency by the applicant in a state other than Florida or in another country and the date non-Florida residency was terminated.  (5) Proof of voter registration in this state with the voter information card address of the applicant, or other official correspondence from the supervisor of elections providing proof of voter registration, matching the address of the physical location where the exemption is being sought.  (6) A valid Florida driver’s license issued under s. 322.18 or a valid Florida identification card issued under s. 322.051 and evidence of relinquishment of driver’s licenses from any other states.  (7) Issuance of a Florida license tag on any motor vehicle owned by the applicant.  (8) The address as listed on federal income tax returns filed by the applicant.  (9) The location where the applicant’s bank statements and checking accounts are registered.  (10) Proof of payment for utilities at the property for which permanent residency is being claimed.

73. withum.com 2020 State Individual Income Tax Rates New Jersey: 1.40% to 8.97% (Over $1 Million - 10.75%) New York: 4% to 8.82%. (Plus NYC up to 3.876%) Pennsylvania: 3.07% flat rate Georgia: 1% to 5.75%. Florida: No Income Tax

74. withum.com 2020 State Estate Tax Rates New Jersey: No Estate Tax New York: 3.06% to 16%. Pennsylvania: No Estate Tax Georgia: No Estate Tax Florida: No Estate Tax

75. withum.com 2020 State Inheritance Tax Rates • New Jersey imposes inheritance tax on the transfer of real or personal property valued at more than $500 at graduated rates on individuals based on their relationship to the decedent • 0 – 16% New Jersey: • In Pennsylvania, transfers from the decedent's estate will be subject to a rate of tax based upon the relationship between the decedent and the transferee (0% to 15%): • 4.5% for transfers to direct descendants (lineal heirs) • 12% for transfers to siblings • 15% for transfers to other heirs Pennsylvania: • Does not impose inheritance tax New York / Georgia / Florida:

76. withum.com Why Residency Matters Residents Non-Residents Are taxed on 100% of your worldwide taxable income Worldwide income includes EVERYTHING Are taxed only on the income earned in the jurisdiction Income Sourced to a state includes: • Services performed in that state • Earnings from business entities operating in that state • Interest, dividends and capital gains earned as a result of the “business” operations in that state • Certain intangible income Estate taxes

77. withum.com The Two Part Determination Ultimately, nearly all states determine residency either via:  Domicile • Home • Business • Time • Family • Near & Dear Items • Additional Factors  OR Statutory Residency • Minimum Number of Days in-state PLUS • Permanent Place of Abode

78. withum.com DOMICILE

79. withum.com Domiciliary – A State of Mind  The place where the taxpayer has his/her true, fixed, permanent home.  The principal place to which the taxpayer intends to return whenever absent. “Domicile”  Maintains no permanent place of abode in the state and has permanent place of abode. elsewhere and spends 30 days or less in the state  Foreign country exception. Two circumstances when a domiciliary is NOT a resident of the state:

80. withum.com  Number  Size  Value  Nature & Use  Historical Evidence examined:  Diary  Living patterns  3rd party documentation Considerable items:  Pets  Jewelry  Art; Photos Pattern of employment:  Involvement w/ in-state vs. out-of-state trade  Investments in in-state business  Continued employment in-state  Continued investment in-state Evidence examined:  Children’s school of attendance  Location of immediate family Home Time Spent Near & Dear Items Active Business Involvement Family Connections 1 2 3 4 5 Weighted Equally Reviewed If 1-4 Prove Inconclusive Domicile Defined Under the terms of the NESTOA agreement, domicile is determined by applying the following primary factors:

81. withum.com Additional Factors for Domicile Additional Factors • Mailing address for bills, financial records, etc. • Safe deposit box rental • Vehicle registrations • Driver’s License • Voter Registration • Telephone service • Citations in legal documents (wills, contracts, etc.)

82. withum.com Very Subjective Determination As much weight lies in the presentation to the auditor What you should do: Remind auditors of the guidelines frequently! FALSE! Evaluation of Domicile Factors • “The fact of the matter is individuals do not have to eliminate all their contracts with New York to be determined to be nonresidents.” • “It must never appear that the auditor is only looking for residual New York presence to justify requesting additional information.” • “An individual who has not maintained a diary should not be told ‘if you can’t prove exactly where you were every day I would hold it as a New York day.” Secondary Domicile Factors: • Many taxpayers have been told and led to believe that a change in these secondary factors will indicate a change in domicile • Secondary factors are merely “window dressing” and “bonus points.” They do not carry enough weight to change domicile status.

83. withum.com Domicile Checklist  Change car registration  Change driver’s license  Change voter’s registration  Religious affiliations, such as: churches, synagogue’s, etc.  Moving of personal items  Insurance policies  File for homestead exemption, if applicable  Social affiliations, such as: country clubs, dining clubs, etc.  Execute new bank accounts and brokerage accounts  Parking Exemption  Fishing License  Co-op Letter

84. withum.com In the Matter of Gregory Blatt, DTA No. 826504 (2/2/17) • ALJ rules that taxpayer changed his domicile from NY to Texas in 2009 and 2010. • Near and Dear Items: Rescue dog moved • Home: NYC apartment owned; Dallas apartment leased; Hamptons house. • Time: a few more days in TX vs. NY days; Summers in the Hamptons • Active Business Involvement: CEO of Match in TX, but former GC to IAC in NYC. • Family: recent break- up with NY girlfriend, friends in Dallas. • EMPLOYMENT OPPORTUNITIES DICTATE TAXPAYER’S INTENT CONTEMPORANEOUS EMAILS = TESTIMONY

85. withum.com Matter of Stephen C. Patrick, DTA No 82838-826839, June 15, 2017

86. withum.com The Drama of Domicile • ALJ rules that taxpayer changed his domicile despite significant days in NY and apartment in NY. • Home: Apartment in NYC and apartment in Paris. • Time: 163 days in NY in 2011 and 183 days in NY in 2012. • Active Business Involvement: Retired but board meetings and audit committee in NY. • Family: Marriage to second wife in Paris TESTIMONY PROVES INTENT!

87. withum.com Everyone is an Expert On a Florida Golf Course  Taxpayers must be told (repeatedly) that making a Florida declaration of domicile will not make them a nonresident of New York.  Taxpayers must be reminded that buying an apartment in Florida by itself, will not change their domicile.  If the taxpayer has a New York City resident parking exemption: SURRENDER IT. Audits Reveal Your Wealth Status Matter of Ingle, NYS Division of Tax Appeals (Oct. 14, 2010)

88. withum.com Matter of Daniel & Phyllis Goffredo (NJ) • The Tax Court held that the taxpayer and his wife did not meet the requirements for a change in domicile. They were considered to be NJ residents even though they purchased a new house in PA • Taxpayer purchased and moved to a house in PA due to his new position • Continued to maintain their NJ home • Used the NJ home as home address on tax return, contends that they used it in case correspondences came from the service. There were family members available to respond to it immediately • Retained NJ bank account, driver licenses, motor vehicle registration • A domicile is established and maintained until a new one is found.

89. withum.com Matter of Norman D. Wolff (NJ) • The Tax Court held that the taxpayer & his wife were considered to be domiciled in NJ • Taxpayer, a member of the US Navy, lived with his parents in PA. • Shortly after being transferred to NJ, purchased a single-family residence in NJ • Registered voter, driver’s license in PA • Court concludes that PA residence was owned by his parents and paid property taxes for. Voter registration registered in PA for convenience of the taxpayer since voting was done on a national level. Driver’s license to avoid the necessity of obtaining a license in each state he was stationed • With the intent to never return to PA, the taxpayer’s domicile was concluded to be in NJ

90. withum.com STATUTORY RESIDENCY

91. withum.com The term “resident individual,” as defined by the New York State and New Jersey tax law, includes: • All persons domiciled in that state • Any individual (other than an individual in active service in the Armed Forces of the United States) who is not domiciled in that state, but who maintains a permanent place of residence for substantially all of the taxable year in that state and spend sin aggregate more than 183 days of the taxable year in that state. General Residency Rules for New York & New Jersey

92. withum.com  Taxpayer  Maintains a permanent place of abode in the state  Spends more than 183 days in the state Matter of Robertson, NYS Tax Appeals Tribunal (Sept. 23, 2010) Statutory Residency

93. withum.com Defined Maintain: Is broadly defined: Contributions to the place of abode need not be in the form of $$$. The taxpayer can provide help with cleaning, cooking, and groceries. Problem Areas:  Former spouse  Friend’s apartment  Children’s apt. paid for by taxpayers Permanent: Place of Abode: Must contain cooking and bathing facilities  Problem area = hotels The permanency requirement gives rise to two key exceptions under the statutory residence rules: 1. Taxpayer is present in the state for the accomplishment of a particular purpose 2. 11 month “rule:” PPA must be maintained for “substantially all” of the year  House, cooperative, rental apartment, or condo  Can be summer/winter vacation home  Must have the keys Maintains a Permanent Place of Abode

94. withum.com The Day Count The day count is a mathematical test What is a “day” in the state?  For purposes of the statutory residency test, any part of a day in New York counts as a day  Ten minutes in the state can count as a day  Working days constitute a different test for New York State purposes Two Exceptions 1. Travel exceptions 2. Medical recuperation

95. withum.com What Constitutes a “Day”?  Zannetti v. NYS Tax Appeals Tribunal, 05/07/2015  Spending more than 183 days in New York and having a permanent place of abode qualifies you as a New York resident under state’s income tax laws  The regulations provide that, with certain exceptions, presence within New York State for any part of a calendar day (even 5 minutes) constitutes a day spent within New York State

96. withum.com Tom Hanks Plans His Time in New York Carefully By October 10th of 2013, Tom Hanks had spent roughly 149 days in New York between rehearsing for and appearing in the Broadway play, “Lucky Guy.” Before the end of 2013, Hanks had to return to the city for the opening of his film, “Captain Phillips” on October 10, and again in December for another film he was starring in, “Saving Mr. Banks.” So, Hanks had to ration the days he spent in NYC before midnight of December 31st, by ducking out early from the premier festivities surrounding Captain Phillips.

97. withum.com John Gaied v. NY DTF The NYS Tax Appeals Court Case was decided on 12/27/12. Gaied was found to be a statutory resident during 2001-2003.  He owned the NY home his elderly parents lived in.  The telephone and utilities were under his name at the apartment and he paid those bills.  He had unfettered access to the apartment and he occasionally slept there. He did not live there.  He lived in NJ, but he worked in NY everyday which means he satisfied the (more than) 183 day rule.  He was a registered voter in New York.

98. withum.com Gaied Case Details Gaied ALJ agreed with the Department  Supreme Court agreed with Tribunal with dissents.  Appeals Court again for State with dissents.  2/18/14, the New York State Court of Appeals (the state’s highest court) rules for Gaied, sort of (Case remanded). Tribunal I was for the taxpayer Tribunal II reversed and caused chaos

99. withum.com Implications of the Gaied Case Ownership by itself does not, by itself create residency Application in other parent cases For a person to be taxed as a statutory resident in NY, that person must have a residential interest in New York living quarters Application for vacation home in Hamptons, Catskills, Adirondacks for New York City source families

100. withum.com David & Karen Sobotka (Decided 8/20/15)  Held that New York cannot add or adjust days in the statutory resident determination apart from the New York domicile period.  Court ruled David Sobotka cannot be subjected to tax as a “statutory” resident because:  He did not maintain a “permanent” place of abode in New York State or City.  A hotel room maintained by his employer while he was assigned to New York on a temp basis was not permanent by its very nature and lacked the “permanence” required under the Tax Law.  The “statutory” resident provision (NY Tax Law § 605 (b)(1)(B)) only applies to taxpayers who are “not domiciled in New York”  Since it is undisputed that Mr. Sobotka was domiciled in New York during part of 2008, one of the three requirements of the statutory resident test was not met

101. withum.com Cell Phone Records – Reliability How accurate and reliable are the cell phone records? • Cell phone records could be helpful • Records vary based on telephone company • Records are not always accurate • The records do not track Call Forwarding or Wi-Fi calling

102. withum.com Cell Phone Records – Type and Accessibility Type and Accessibility of data depends on carrier:  Verizon: Voice only; City, State location; CDMA system may cause false positives; DTF can get logs without taxpayer notification  AT&T: Voice, SMS and Data; Highly specific location; GSM system, less false positives than Verizon; need taxpayer authorization to obtain records  Others: Usually only keep records for two years; requires court-ordered subpoena

103. withum.com Cell Phone Records – Reliability Multiple Connectivity Factors  Tower Height  Tower Location  Time of Day  User’s Location  Physical Obstructions Cell phones connect to the strongest tower not the closest tower; this can result in false positives  Be particularly wary of false positives in NJ/NY and CT/NY border cases

104. withum.com INCOME ALLOCATION

105. withum.com Matter of Tosti, NYS Tax Appeals Tribunal (May 12, 2011) Income Allocation • Taxpayers with more than one employer • Separate allocation for each employer. • Salespersons • Proportion that the volume of business transacted in state bears to the total volume of business transacted everywhere. • Allocation of income from a business • Allocation must be on fair and equitable basis in accordance with approved methods of accounting. Generally this means follow the business allocation percentage.

106. withum.com Income Allocation A nonresident taxpayer is given the opportunity to allocate income, reporting to New York State only that income actually generated in New York. In addition, the nonresident need only report to New York income from intangibles which is attributable to a business, trade or profession carried on in the state. Thus, significant benefits may be derived from filing as a nonresident.  Employees  Allocate based on the proportion of total compensation for services rendered which the total number of days worked in New York State bears to the total number of days worked both within and without New York State.  Convenience of Employee  Trap for the unwary. May result in a taxpayer who performs little or no work in New York allocating 100% of the related wages to New York.

107. withum.com Income Allocations Allowed by Other Jurisdictions A jurisdiction may allow income to be allocated when it is earned partly inside and partly outside the state. • For example, wages and compensation may be allocated using a ratio of days worked in the state over days worked everywhere. • Since the allocation of time worked in the state reduces the wage income taxed by the other jurisdiction, it must be taken into consideration when determining the income actually taxed by the other jurisdiction. • Business (partnerships & S corporations) allocate or apportion income.

108. withum.com Nonresident Page 1- NJ-1040NR NJ Nonresident Income Tax Return - Form NJ-1040NR, Page 1

109. withum.com Nonresident and Part-Year Resident Page 1- IT-203 NYS Nonresident Income Tax Return - Form IT-203, Page 1

110. withum.com Form: IT-203-B Nonresident and Part-Year Resident Income Allocation and College Tuition Itemized Deduction Worksheet NYS Nonresident Income Tax Return - Form IT-203-B

111. withum.com Form: IT-203-F Multi-Year Allocation Form NYS Nonresident Income Tax Return - Form IT-203-F

112. withum.com NYS Resident Income Tax Return IT-201: Page 1 NYS Resident Income Tax Return - Form IT-201, Page 1

113. withum.com Form: IT–360.1 Change of City Resident Status NYS Resident Income Tax Return - Form IT-360.1, Change of City Status

114. withum.com AUDIT & AUDIT TIPS

115. withum.com withum.com Untangling the Residency Web What’s the Purpose of the Nonresident Audit? NYS Audit Guidelines “To verify the correctness of return filed” “Barry’s Audit Guidelines” To intrude on the taxpayer’s life and to raise as much money as possible OR

116. withum.com In any NYS/NYC Personal Income Tax (PIT) or Residency Audit, the 3 key issues are: Nonresident Income Allocation Domicile Statutory Residency The Audit: Three Key Issues

117. withum.com Clients with any type of permanent place of abode in the state should maintain a contemporaneous diary with third party documentation such as: • Credit card receipts • EZ Pass records • Telephone records • Records related to travel • Business expense reports The Day Count – Audit Tips

118. withum.com Income Allocation Audit Tips 1. Part Days = OK • Unlike the statutory residency test, income allocation may be based on a partial day. 2. Convenience of the Employee Test • Requires careful planning • A worker who never sets foot in the state can end up with 100% allocation and a double tax 3. Keep a Contemporaneous Diary 4. Golf Days (may) count

119. withum.com 1. Review estate plan before changing residency. 2. “I never slept in the apartment.” 3. Inadequate records – always prepare for the audit, review all records. 4. Keep separate counts for husband and wife; keep separate day counts for work and pleasure. 5. Always answer questions and schedules on IT-203 and IT-203B. 6. Fill out mailing and permanent addresses on tax return. 7. Work with agent, not against. 8. Keep contemporaneous records. 9. Watch travels carefully; avoid the whipsaw effect. 10. Domicile changes are usually a “creepy effect.” 11. Usage by one person: credit card, EX- Pass and phone. 12. File separate state tax returns, in certain circumstances. 13. Beware of the state residency tax examinations. Top Thirteen Audit Tips & Traps

120. withum.com Stay Out of Trouble! Tax Compliance and Enforcement i. Increased scrutiny of tax returns, including an upsurge in tax examinations ii. Interest on underpayment iii. Civil penalties iv. Criminal and fraud penalties v. Bad check or failed electronic withdrawal fees

121. withum.com Considerations When Moving a Business These slides will give an overview of the considerations involved when moving a business. However, every business is different, and the needs of a specific business moving from a legacy state to the new state will vary from business to business.

122. withum.com What Kind of Move is the Business Considering? The entire business – a complete move from one state to another A partial move • Just the headquarters is moving to a new state • Some operations will move to the new state while some operations remain behind in the legacy state

123. withum.com Entity Formation and Business Registration If an entity is formed pursuant to the laws of a state or registered to do business in a state, it is required to file annual income tax returns in that state and pay franchise (or minimum taxes) regardless of whether it actually does business in the state.

124. withum.com Was the business formed/incorporated pursuant to the laws of the legacy state? • If so, it may need to consider reincorporating in another state (i.e., an F re-org) • F re-org needs to be accomplished in a way to leave carryover tax attributes intact • The business needs to consider where its new state of formation should be – the new state or a third state (e.g., Delaware) • If the entity is changing its state of formation, it may also want to consider changing its entity type (e.g., C Corp to LLC). If the business was only registered to do business in the legacy state, does the business need to rescind those registrations.

125. withum.com How Many Employees Will the Business Bring to a New State? Does the business need to offer relocation packages to employees? • Does the business need to offer severance packages to employees who decline to relocate, or will the business allow these employees to work remotely from the legacy state (or elsewhere) Does the number of employees the business plans to bring to the new state warrant asking the state for economic development incentives?

126. withum.com What are the Facilities Needs of the Business in the New State? How much office space will the business need in the new state in a post-COVID work environment? • Will the business still need substantial office space • We-Work office arrangements What is the business’ plans regarding remote work going forward? • Does the business need to register to do business in additional states as a result of a change in remote work policies How much capital investment is the business making in the new state? • If there is a significant capital investment in new facilities, does this warrant approaching the state for incentives (e.g., sales tax exemptions)

127. withum.com Notifications What sort of notifications is the business obligated to give to vendors and customers regarding the move? • If the business will regain its office in the legacy state, this may not be so much of an issue. If the business is leaving its office in the legacy state, vendors and customers will need to be provided a new address to contact the business What sort of public notification is required from a business perspective regarding the move?

128. withum.com Employment and Benefit Issues How many employees are moving to the new state? Does the business need to change its benefit plan offerings to make sure that employees have adequate access to in- network healthcare providers?

129. withum.com Physical Move Issues What sort of FF&E does the business plan to move to the new state?  Does any of this FF&E require special handling • If so, is any of the FF&E seasonally affected (e.g., some items will only be shipped in late fall through early spring to keep them temperature controlled)

130. withum.com Certifications and Licenses Does the business need to obtain any new industry or professional certifications/licenses to operate from the new location? • New outside counsel Does the business need to obtain new vendors related to certification/license issues?

131. withum.com Real Estate and other Considerations • Owner occupied real estate is common to middle market, closely held businesses. • Section 1031 – Allows the deferral of tax on the gain to the extent the proceeds are reinvested in like kind property: • Limited to real property  Held for investment or business use. • As the business is relocated to say FL, most states allow for a deferral similar to the Federal Law. • Cost Segregations and tax benefits • CARE Act – Leasehold Improvements provisions

132. withum.com Real Estate and other Considerations, cont’d Market Drivers In Florida • Multifamily Residential • Growth of commercial space and fulfillment centers • Hospitality, health care and medical • Outlook • Retail, office, Hotel and Hospitality, expected to be down in the next 12 months • Land, Industrial warehouse, Industrial Flex, Apartments and Senior Housing up the next 12 months.

133. withum.com Real Estate and other Considerations, cont’d Why Florida? • Florida was the second fastest growing state in the nation. • Trend is expected to continue • Increases demand for real estate • Other bright spots: • No personal income tax, inheritance tax or estate tax

134. withum.com Pitfalls • Sales tax on Commercial Rental • A business that relocates to FL will still have income allocated to other states and may still owe state income tax. • Ability to obtain tax concessions in Florida are limited.

135. withum.com Contact Your Presenters BE IN A POSITION OF STRENGTH SM Moderator: Stuart McCallum ASA, Partner smccallum@withum.com Peter Hilera CPA, Tax Partner philera@withum.com Jonathan Weinberg JD, LL.M, SALT Senior Manager jweinberg@withum.com Barry H. Horowitz CPA, MST, SALT Partner & Market Leader bhorowitz@withum.com Monica Jalife Withum Wealth Management CFA, CFP®, MBA mjalife@withumwealth.com Elena Ladygina Withum Wealth Management CFP®, Wealth Advisor eladygina@withumwealth.com

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