Carson v. Dept. of Rev.

CourtOregon Tax Court
DecidedNovember 18, 2016
DocketTC-MD 150355N
StatusUnpublished

This text of Carson v. Dept. of Rev. (Carson v. Dept. of Rev.) is published on Counsel Stack Legal Research, covering Oregon Tax Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Carson v. Dept. of Rev., (Or. Super. Ct. 2016).

Opinion

IN THE OREGON TAX COURT MAGISTRATE DIVISION Income Tax JOHN A. CARSON ) and MARLIS C. CARSON, ) ) Plaintiffs, ) TC-MD 150355N (Control) ) v. ) ) DEPARTMENT OF REVENUE, ) State of Oregon, ) ) Defendant. ) ) ) JOHN A. CARSON ) and MARLIS C. CARSON, ) ) Plaintiffs, ) TC-MD 160203N ) v. ) ) DEPARTMENT OF REVENUE, ) State of Oregon, ) ) Defendant. ) FINAL DECISION

The court entered its Decision in the above-entitled matter on October 10, 2016.

Plaintiffs timely filed a Statement for Costs and Disbursements (Statement) on October 21, 2016,

requesting their costs in the amount of $504 for the court filing fees. Defendant timely filed an

Objection to Plaintiffs’ Statement on October 31, 2016. The court’s analysis and determination

of Plaintiffs’ request for costs and disbursements is contained in section III. The court’s Final

Decision otherwise incorporates its Decision without change.

Plaintiffs appeal Defendant’s Notice of Deficiency Assessment, dated April 7, 2015, and

Notice of Assessment dated January 26, 2016, for the 2010 and 2011 tax years, respectively. A

trial was held on June 8, 2016, in the courtroom of the Oregon Tax Court in Salem, Oregon. Ted

FINAL DECISION TC-MD 150355N; 160203N 1 E. Runstein, attorney, appeared on behalf of Plaintiffs. John A. Carson (John) and Marlis C.

Carson (Marlis) testified on behalf of Plaintiffs.1 Nancy Berwick, tax auditor, appeared on

behalf of Defendant. The parties filed Stipulated Facts on June 7, 2016. Plaintiffs’ Exhibit 1 and

Defendant’s Exhibits A through S were received without objection.

I. STATEMENT OF FACTS

Plaintiffs owned two residences during the tax years at issue; one in Lake Oswego,

Oregon and the other in Sun Valley, Idaho. (Stip Facts at ¶¶11-12.) There is no dispute that

Plaintiffs were domiciled in Oregon prior to 2009. (Id. at ¶5.) Marlis testified that, in 2008,

John turned 80 and she had survived cancer; at that point in time they decided to make the move

from Oregon to Idaho. She testified that they planned to make the transition from Oregon to

Idaho in 2009 because 2008 was already half over. Marlis testified that Plaintiffs talked with

their accountant in 2008 about their decision to move to Idaho and they were told that they

needed to be out of Oregon for at least six months plus one day.2 John and Marlis each testified

that, during the tax years at issue, they typically spent summers and winters in Idaho, and springs

and falls in Oregon or elsewhere. They each testified that, during the 2009, 2010, and 2011

years, John kept track of days that Plaintiffs spent in Idaho. (Ptfs’ Ex 1 at 1-3.) Their total

annual days in Idaho were as follows: 226 in 2009; 186 in 2010; and 185 days in 2011. (Id.) No

evidence was presented to indicate how many days Plaintiffs spent in Oregon each year.3

/// 1 When referring to a party in a written decision, it is customary for the court to use the last name. In this case, the court’s Decision references two individuals with the same last name, Carson. To avoid confusion, the court will use the first name of the individual being referenced. 2 Defendant questioned whether Plaintiffs’ residency change was a tax planning tool. Marlis testified in response that income taxes were not a part of the decision. She testified that Sun Valley, Idaho imposes a nine percent sales tax, so the change to Idaho did not result in a big tax advantage. 3 Plaintiffs’ residency questionnaire submitted to Defendant states that Plaintiffs spent “170 or less” days in Oregon in 2009, 2010, and 2011. (Def’s Ex F at 2.)

FINAL DECISION TC-MD 150355N; 160203N 2 For the 2010 and 2011 tax years, Plaintiffs timely filed joint Oregon income tax returns

as full-year nonresidents of Oregon. (Stip Facts at ¶1.) Defendant issued notices of assessment

based on its determination that Plaintiffs did not intend to abandon their Oregon domicile as of

2010 or 2011. (See Def’s Ex D, Conference Decision Ltr at 5.) Plaintiffs assert that they were

domiciled in Idaho, not Oregon, in 2010 and 2011. (Compl at 1.)

A. Plaintiffs’ Oregon Connections

1. Early life and family

John and Marlis were each born in Oregon and were domiciled in Oregon all of their

lives until at least 2008. (See Stip Facts at ¶¶4-5.) John testified that he served in the Navy after

high school and then attended the University of Oregon. He testified that, after attending

university, he joined the Infantry and served during the Korean War. John testified that, after

completing his military service, he returned to Oregon to work. John bought a house in Lake

Oswego in 1969. (Id. at ¶12.) John testified that he and Marlis married in 1970. He testified

that, after Plaintiffs’ marriage, they added a bedroom to the Lake Oswego house for their

children. During the tax years at issue, Plaintiffs maintained “minimal personal effects” in their

Lake Oswego house for use when they visited Oregon. (Id. at ¶12.) John testified that Plaintiffs

have never wanted to sell their Lake Oswego house and may leave it to their children. (See id.)

Plaintiffs have four adult children who each lived in Oregon at least part of the year.

(Stip Facts at ¶20.) Marlis testified that one of Plaintiffs’ daughters lived in California in 2010

and 2011, and she temporarily lived in Plaintiffs’ Lake Oswego house upon her return to Oregon

in 2011. She testified that, as of the date of trial, one of Plaintiffs’ sons lived in Palm Springs,

California, and Plaintiffs periodically visited him there.

///

FINAL DECISION TC-MD 150355N; 160203N 3 2. Business activities

John testified that he purchased an oil company in 1971 that became Carson Oil. (See

also Stip Facts at ¶9.4) John testified that he retired in 2004 and sold Carson Oil to his stepson

on a 10-year payment schedule. (See also id.) He testified that his stepson now runs the

company. Since 2004, John has received a $500 monthly stipend from Carson Oil that is

intended to pay for a portion of his medical expenses. (Id. at ¶10; see also Def’s Ex R.) John

testified that there are gaps in his Medicare coverage for vision and dental, so the stipend is to

supplement Medicare. He testified that the stipend was not paid in return for services rendered

to Carson Oil during the tax years at issue, even though he may on occasion have spoken with

his stepson about the business during that time.

John testified that, as of 2004, he owned three commercial properties in Oregon. He

testified that he eventually sold all three properties to his stepson. According to their 2010 and

2011 Schedules E, Plaintiffs received rental income of $37,200 and $24,800, respectively, from a

commercial property located in Cascade Locks, Oregon. (Def’s Exs K at 16, L at 13.) John and

Marlis were each surprised to learn that they still owned the Cascade Locks property in 2010 and

2011. According to an OLCC News Release, dated November 21, 2011, Plaintiffs were listed as

corporate principals for the Food Mart in Hood River, Oregon. (Def’s Ex Q at 1.) John testified

that he was not a corporate principal of Food Mart in 2011.

3. Community and philanthropic activities

Historically, Plaintiffs were active with Oregon organizations. By 2008, Plaintiffs had

“discontinued long-term financial support to the Oregon Symphony” and “discontinued long-

term personal involvement * * * with Legacy/Good Samaritan Medical Center and the Oregon

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Carson v. Dept. of Rev., Counsel Stack Legal Research, https://law.counselstack.com/opinion/carson-v-dept-of-rev-ortc-2016.