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IN THE OREGON TAX COURT
MAGISTRATE DIVISION
Lyle M. THOMPSON
and Shirley A. Thompson,
Plaintiffs,
v.
DEPARTMENT OF REVENUE,
Defendant.
(TC-MD 991027C)

Plaintiffs appealed the assessment of additional taxes for 1996 arising from income received from the sale of a business in Oregon. Plaintiffs argued they were no longer residents of Oregon at the time of the sale; therefore, the income was not subject to tax by Oregon. Based on the facts and circumstances such as the Plaintiffs' continued use of the Oregon residence evidenced by telephone, cable, insurance, garbage, electric, and other household services, the court found that Plaintiffs did not abandon their Oregon domicile and acquire a new domicile in Washington before the sale of the business. Therefore, Plaintiffs were domiciled in Oregon and subject to income tax on the income from the sale.
Income taxation
1. Oregon imposes income tax on the taxable income of every resident of the state. ORS 316.037.
Income taxation - Residence
2. Residence, as defined in ORS 316.027(1) is equated with domicile, but the two terms are not synonymous.
Income taxation - Domicile
3. Domicile is a common law concept comprised of: (1) a fixed habitation or abode; and (2) an intent to remain. An individual may have only one domicile at a time.
Income taxation - Domicile
4. A determination of domicile is based on all the facts and circumstances of the situation.
Income taxation - Domicile - Change
5. To establish a new domicile a person must demonstrate: (1) specific intent to abandon the old domicile; (2) specific intent to acquire a new domicile; and (3) actual physical presence for some period in the new domicile after the intent to stay is formed. OAR 150-316.027(2).
Income taxation - Domicile - Establishment of new domicile
6. A transitory residence will not meet the standard for establishment of domicile. The intention required to establish a domicile of choice is an intention to make a home in fact, and not an intention to acquire a domicile.
Trial was held January 5, 2000, in the courtroom of the Oregon Tax Court, Salem. John Magliana, Portland, argued the cause for Plaintiff.
Jerry Bronner, Assistant Attorney General, Department of Justice, Salem, argued the cause for Defendant.
Decision for Defendant rendered June 12, 2000.
DAN ROBINSON, Magistrate.
Plaintiffs appealed Defendant's assessment of additional taxes for 1996 stemming from income Plaintiffs received from the sale of a business in Oregon. Plaintiffs contend they were no longer residents at the time of the sale and that the income is therefore not subject to tax by this state. A trial was held January 5, 2000. Plaintiffs were represented by John Magliana, Attorney at Law. Defendant was represented by Jerry Bronner, Assistant Attorney General. Each side presented sworn testimony through several witnesses. Post trial briefs were filed and the record closed February 29, 2000.
STATEMENT OF FACTS
Plaintiffs were domiciled in Oregon prior to January 1, 1996. They lived in a home they owned on SW Heron Court in Beaverton. Since 1983, Mr. Thompson had been a shareholder in Beaverton Funeral Home, Inc., an Oregon corporation, and was employed as its funeral director until he sold all of his stock to a publicly traded company (the Loewen Group International, Inc.) on March 28, 1996. Mr. Thompson continued to work for the business on a consulting basis after the sale.
According to the sworn testimony, Plaintiffs began contemplating their retirement and decided to move to the bordering state of Washington. Plaintiffs had previously owned property (one undeveloped acre) in Washington and, like most people in Oregon, were aware that Washington does not impose a tax on income. Plaintiffs had a real estate professional estimate the value of their home in September 1995 and met with an Oregon attorney, in the fall of 1995, to discuss the tax consequences of the anticipated sale of the funeral home stock. The representation included advice on the law of residency and domicile in Oregon.
Plaintiffs' attorney issued a detailed letter on the relevant law, including the element of intent and burden of proof, dated December 27, 1995. Mr. Thompson testified that he understood he needed to be moved before the sale of the stock occurred in order to avoid paying taxes to Oregon.
Continuing with their planning, Plaintiffs met with a Washington builder in January 1996 to discuss the construction of a home in that state. Sometime thereafter, they began meeting routinely with the builder and, on April 26, 1996, roughly one month after the sale of the business, Plaintiffs signed a contract for the purchase of a lot in Camas, Washington, and for the construction of a home on that property. The home was completed September 4, 1996.
Meanwhile, in the latter part of January (1996) Plaintiffs began packing their personal belongings. They opened a bank account (checking and savings) and rented a post office box in Washington on February 29, 1996. Plaintiffs completed a rental application for a townhouse in Vancouver on March 14, 1996, that was approved on or about March 20. Plaintiffs rented that townhouse until their home was completed in September. The rental agreement provided for prorated rent from March 20, 1996, to March 31, 1996, with an agreement to lease the apartment for a six-month period thereafter. Plaintiffs' electricity service at the Washington townhouse began on March 20, 1996, and their telephone service was activated April 2, 1996. They ordered the phone service in late March but, as is not uncommon, it took some time for the phone company to act on the request.
It was not until approximately March 10, 1996, that Plaintiffs knew for certain that the business was being sold to Loewen. According to Mr. Thompson's testimony, the target date for the sale was April 15. On March 16, 1996, Plaintiffs went on a planned two week vacation to Escondido, California. Friends joined them the following week. Plaintiffs kenneled their dog at Cooper Mountain Kennel in Beaverton while on vacation. Apparently, the vacation was to end on March 30. However, while on vacation Plaintiffs learned that the closing date for the sale had been accelerated to March 28, 1996. They apparently approved the accelerated sale date by phone on March 24. Plaintiffs cut short their vacation and returned by plane to Oregon on March 26.
Plaintiffs arrived at the Portland International Airport around dinner time on March 26 and went to the Vancouver apartment complex to sign the formal rental agreement after inspecting their unit. According to the testimony, they then drove across the river to Oregon, retrieved their dog from the kennel in Beaverton, and drove to the funeral home to borrow a full -sized van to use in transporting their belongings from Beaverton to Vancouver. Richard Hansen, an employee of the Beaverton Funeral Home, testified that he personally checked out the van to Plaintiffs. He remembered the event because it was unusual - Mr. Thompson never borrowed the company van. Hansen offered to help Plaintiffs move, but Mr. Thompson responded that everything was packed and ready to go and he and his wife could handle it.
Mr. Thompson testified that he and his wife made two trips to Vancouver that night with their belongings in the van and the trunk of their car. Packing was relatively easy because most items were already in boxes. The drive from Beaverton to Vancouver, according to Mr. Thompson's sworn testimony, took 45 minutes. Plaintiffs insist they moved much of their belongings that night (March 26). Additional items were apparently moved the following day. Mr. Thompson testified that after moving all of their belongings on the night of March 26, they unpacked at least some items that night before going to bed, in Vancouver. They slept on the double bed that was set up that night. Mr. Thompson testified that they slept in Vancouver every night after March 26, except for a few occasions when they stayed in the Beaverton home with their grown children, who met them there before going to the beach.
Mr. Thompson testified that the following items were moved the night of March 26: a card table and four chairs, which they used as a dining room table in Vancouver; a television; a sofa/hide-a-bed; a television stand; a recliner; a double bed; some clothes; kitchen utensils; china; figurines worth about $250 each (referred to as collectibles); bedding; boxes containing records, etc.; golf clubs; and their toiletries. Plaintiffs also moved their dog. According to the sworn testimony, there were enough boxes that they were stacked three high along the wall of the second bedroom and in the garage of the Vancouver townhouse. Although some of the items were heavy, Mr. Thompson testified that as a funeral home director he was accustomed to carrying heavy objects. They had in the past moved on a number of occasions, always making the move themselves. There was testimony by Plaintiffs' accountant that the Thompsons are organized and frugal.
Plaintiffs admit that some belongings were left in the Beaverton home for several months after the purported move. That was done for two reasons. One reasons was that the townhouse was not large enough to store all their belongings that had come to fill a 2,700 square foot house. The other reason was that the Beaverton home was for sale and the Realtor suggested it would be easier to sell if the house was furnished. In reviewing Plaintiffs' Exhibit 31, it appears that most of the furniture was left behind, including a china cabinet, a number of dressers and night stands, more than a dozen chairs, a dining room set, a console TV, recliners, a washer and dryer, and a barbeque. The mover's list includes 100 items, many of them substantial pieces of furniture.
Plaintiffs accepted an offer on their Beaverton home May 15, 1996, and closed July 1. The items left in the home were kept there until July 3, two days after the closing date, which began with an accepted offer on May 15. It became necessary for Plaintiffs to rent their home from the buyers for two days and hire a moving company to move their furniture. Plaintiffs paid the movers $1,400. The home was first listed for sale April 13, 1996, as a one-party listing agreement. No sale resulted. Plaintiffs then executed a full -listing agreement on May 9, 1996, which eventually led to a sale of the home. The May 9 listing agreement indicates that the house was owner

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