Stores in Vegas

Relocating a business to Las Vegas to save on tax?

I have a couuple questions: 1. If Joe has a business grossing $300,000 yearly located in Massachusetts, and that business would have the same gross when relocated anywhere else, then is it wise to relocate the business to Las Vegas, since the state of Nevada has the lowest tax rate in the nation? 2. If so, then when would be the latest time he could relocate and avoid Massachusetts tax? (for example, if he relocates the business by March, then does he pay tax for Massachusetts for 3 months, and Nevada tax for 9 months, or will he be able to avoid Massachusetts tax entirely and only pay Nevada taxes?)

Public Comments

1. Assuming Joe reports his business on a Schedule C, then he would pay a 5.3% tax to Massachusetts on his TAXABLE income, not his GROSS income. In the year Joe moves, he will file a part year Massachusetts income tax return and report his taxable income up to the date he bacame a Nevada resident. In your example, he would pay tax on 3 months income to Massachusets. My question to you is, is the tax savings worth giving up your lifestyle and friends to live in Las Vegas? Jim KIrby, CPA/PFS, CFP, CFS