Look this is all pretty simple: Mike wants to get fired.
Last year, Mike decided to cash out. According to the AOL CEO there had been previous attempts to buy TechCrunch. So one day Mike, who largely covers Silicon Valley, decides to move from San Francisco to... Seattle [1]. His stated reason? Largely, to "mix things up in my life". Washington state, by some amazing coincidence also has no state income tax.
Around the same time Mike dissolves the partnership with Jason Calacanis for the TechCrunch50 conference [2], allegedly a huge part of TechCrunch's income.
Four months later, having established residency in a no state income tax state and having rid TechCrunch of an external party having a large stake in TechCrunch's income, AOL out of the blue (honest!) buys TechCrunch [3].
Two months later, Calacanis sues Arrington over TechCrunch50 [4], a suit I haven't heard anything about since. Honestly, as much as people here like to rag on Calacanis (and Mahalo, which is basically doomed IMHO), I honestly think he has a case here.
To quote Mike Arrington, himself a lawyer, regarding the scandalous clawback clause in the Skype contracts [5]:
> These employees should simply hire a lawyer to sue Skype. There’s a valid fraud claim based on what I’m seeing, and the “atmospherics” (how lawyers describe the legally irrelevant facts surrounding the story that can nonetheless influence a judge and jury) are terrible for Skype.
Honestly I think the "atmospherics" are terrible for Arrington too. The state of California could probably make a case that Mike changed residency simply to avoid tax so they could make a claim that the sale was still taxable too.
Of course, most reading HN will know that any acquisition will typically come with an earn-out over 2+ years. That earn-out, like many vesting schedules, will have a bunch of conditions on it, probably including an acceleration clause for getting fired (termination probably without cause).
Mike wants to get fired.
EDIT: to clarify the residency of California [5]:
> (1) California residents pays California tax on all their income.
> (2) California generally taxes California-source income, …
> So, who is a resident? In determining residency, California law provides two presumptions. The first presumption is that a taxpayer who, in the aggregate, spends more than 9 months of a taxable year in California will be presumed to be a California resident. The second presumption is that an individual whose presence in California does not exceed 6 months within a taxable year and who maintains a permanent home outside California is not considered a California resident provided the taxpayer does not engage in any activity or conduct within the State other than as a seasonal visitor, tourist, or guest.
The point is that there is a subjective test (the last point there). I'm sure Mike dotted all the i's and crossed all the t's (registering to vote in Washington, getting a Washington state driver's license, etc) but if he spends significant time in the Valley it is not clearcut.
you copy and paste the exact same reply every time Arrington is mentioned in a post - and every time there are numerous rebuttals posted in comments here.
I have no idea what your agenda is, but your comment has been discussed ad nauseum multiple times in the past and has nothing to do with OP.
if you are interested in this thread, search for one of the dozen other times it came up with the exact same allegations and exact same characters.
Even one other time is enough - because it was pointed out then that it isn't illegal to change your residence and that Arrington had bought his house in WA, the only house he owns, before he started Techcrunch
this having nothing to do with OP doesn't really need a citation
I have to question what your agenda is as a (former?) TechCrunch writer. Are you perhaps trying to curry favour ahead of the launch of your "pre-launch startup" (from your profile)?
You certainly seem eager to mischaracterize my comments and malign my intentions when we've already gone from "every time" to "once before". While you're at it, point out where the comment is "copy and paste[d]" elsewhere. Since you can't, we'll chalk that accusation up to yet more slander.
Nowhere did I say changing residence for tax purpose was "illegal". Someone else may have characterized it as such. Take it up with them. There's a huge gap between "illegal" and the state of California making a claim that Arrington is still technically resident so the sale is subject to California state income tax.
and to add - your hypothesis that Mike wants to get fired doesn't match any real analysis of the situation.
You seem to have said this only to only re-open your old claims again, but if you read your supporting evidence, it doesn't backup your claim that Mike wants to get fired.
Now I know absolutely nothing of what is going on - but here is some quick analysis.
First - there is no way in the world that MG wrote this post on Techcrunch without Mike knowing about it. If I were a bettering man, I would wager that Mike prompted it.
The evidence? Every time MG writes a 'meta' post about Techcrunch, blogs, politics etc. he writes it on his personal blog. He has never meta-blogged on Techcrunch. Only yesterday he wrote a post on his personal blog about this situation.
Second - Mike said in the press last week that he will still write at Techcrunch. Because he wants to - because he has to.
And remember the fund was announced without Mike stepping down. The 'stepping down' part came only a few hours later when AOL were forced into the move under some media pressure and scrutiny.
Queue screwing up the press announcement about the fund, AOL going back on their statements and then finally telling the press that Mike no longer works there (without Mike saying anything) and suddenly you have a post, on TC, from MG, that reeks of a last-ditched move orchestrated by Mike
This is all about using a public reaction to get Mike's job back at Techcrunch, and everything back to how it was a week ago.
If you spent the amount of time you did on your comment looking at the actual situation without blinders on you would realize that the real conclusions and any real analysis is the opposite of what you suggest (ie. it has nothing to do with CA residency tax codes)
No - all this comes down to is that your comment has literally nothing to do with the OP, isn't the first time you have made the comment, and in any other circumstance would have been downvoted into negative territory because it doesn't meet a single guideline of this site
It absolutely is not illegal for a US citizen to change his state of residence purely for tax reasons. It's only fraud if he does not actually intend to reside there, the motivation behind that intent is completely irrelevant.
You might be able to get in trouble for it though if you had an agreement with another party that you would sell your business to them 1 year in the future (i.e. after changing your residency). The courts might rule that this agreement constituted a sale of the business and that tax should be payable based on residency at the time the agreement was made. I'm not sure if that's actually the case, but I've seen similar rulings in related circumstances.
Last year, Mike decided to cash out. According to the AOL CEO there had been previous attempts to buy TechCrunch. So one day Mike, who largely covers Silicon Valley, decides to move from San Francisco to... Seattle [1]. His stated reason? Largely, to "mix things up in my life". Washington state, by some amazing coincidence also has no state income tax.
Around the same time Mike dissolves the partnership with Jason Calacanis for the TechCrunch50 conference [2], allegedly a huge part of TechCrunch's income.
Four months later, having established residency in a no state income tax state and having rid TechCrunch of an external party having a large stake in TechCrunch's income, AOL out of the blue (honest!) buys TechCrunch [3].
Two months later, Calacanis sues Arrington over TechCrunch50 [4], a suit I haven't heard anything about since. Honestly, as much as people here like to rag on Calacanis (and Mahalo, which is basically doomed IMHO), I honestly think he has a case here.
To quote Mike Arrington, himself a lawyer, regarding the scandalous clawback clause in the Skype contracts [5]:
> These employees should simply hire a lawyer to sue Skype. There’s a valid fraud claim based on what I’m seeing, and the “atmospherics” (how lawyers describe the legally irrelevant facts surrounding the story that can nonetheless influence a judge and jury) are terrible for Skype.
Honestly I think the "atmospherics" are terrible for Arrington too. The state of California could probably make a case that Mike changed residency simply to avoid tax so they could make a claim that the sale was still taxable too.
Of course, most reading HN will know that any acquisition will typically come with an earn-out over 2+ years. That earn-out, like many vesting schedules, will have a bunch of conditions on it, probably including an acceleration clause for getting fired (termination probably without cause).
Mike wants to get fired.
EDIT: to clarify the residency of California [5]:
> (1) California residents pays California tax on all their income.
> (2) California generally taxes California-source income, …
> So, who is a resident? In determining residency, California law provides two presumptions. The first presumption is that a taxpayer who, in the aggregate, spends more than 9 months of a taxable year in California will be presumed to be a California resident. The second presumption is that an individual whose presence in California does not exceed 6 months within a taxable year and who maintains a permanent home outside California is not considered a California resident provided the taxpayer does not engage in any activity or conduct within the State other than as a seasonal visitor, tourist, or guest.
The point is that there is a subjective test (the last point there). I'm sure Mike dotted all the i's and crossed all the t's (registering to vote in Washington, getting a Washington state driver's license, etc) but if he spends significant time in the Valley it is not clearcut.
[1]: http://techcrunch.com/2010/05/03/hi-seattle/
[2]: http://news.cnet.com/8301-1023_3-20004752-93.html
[3]: http://techcrunch.com/2010/09/28/tim-armstrong-we-got-techcr...
[4]: http://latimesblogs.latimes.com/technology/2010/11/jason-cal...
[5]: http://klapachlaw.com/blog/38-february-13-2010-.html