1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 9 REPORTER'S TRANSCRIPT 10 DECEMBER 11, 2017 11 (Prepared from audio recording) 12 13 14 15 SALES AND USE TAX APPEAL HEARING 16 APPEAL OF 17 KEYSHAWN JOHNSON AND SHIKIRI JOHNSON 18 NO. 786255 19 AGAINST PROPOSED ASSESSMENT OF 20 SALES AND USE TAX 21 22 23 24 25 26 27 REPORTED BY: Jillian M. Sumner 28 CSR NO. 13619 1 1 P R E S E N T 2 For the Board of Equalization: Diane L. Harkey 3 Chair 4 Fiona Ma, CPA Member 5 Jerome E. Horton 6 Member 7 Sen. George Runner (Ret.) Member 8 Yvette Stowers 9 Appearing for Betty T. Yee, State Controller 10 (per Government Code Section 7.9) 11 Joann Richmond 12 Chief Board Proceedings 13 Division 14 For Franchise Tax Board: Jason Riley, Tax Counsel Ron Hofsdal, Tax Counsel 15 For Appellants: Keyshawn Johnson, Taxpayer 16 Mardiros Dakessian, Attorney 17 Ruben Sislyan, Attorney 18 19 ---oOo--- 20 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 DECEMBER 11, 2017 4 ---oOo--- 5 MS. HARKEY: Ms. Epolite, will you please 6 introduce the items here -- the appeal. 7 MR. EPOLITE: Sure. 8 Good morning, Chairwoman Harkey, Members. 9 Anthony Epolite and Louis Ambrose of the Appeals 10 Bureau. 11 There are three questions before the Board 12 in this appeal. 13 First, whether the Franchise Tax Board's 14 proposed assessment for the 1996 tax year is barred 15 by the statute of limitations. 16 Second, whether income earned in the years 17 at issue is California taxable income based on the 18 laws of domicile and residency. 19 And, third, whether the post-amnesty 20 penalties may be abated. 21 MS. HARKEY: Thank you very much. 22 Okay. Welcome to the Board of Equalization. 23 You know the routine. You have -- what -- is it 20 24 minutes? Twenty minutes, I believe, to make your 25 case. And the Department will have their time for 26 rebuttal -- or their case, and then you will have 27 another 15 minutes on rebuttal. 28 So please introduce yourself for the record, 3 1 and you may begin. 2 MR. DAKESSIAN: Good morning, Madam Chair, 3 Members of the Board. Glad to be here this morning. 4 My name is Marty Dakessian. With me today is 5 Ms. Lindsey Brown, financial advisor to Mr. Johnson. 6 Seated to my far left is my associate Mr. Ruben 7 Sislyan, and between us sits one of the greatest wide 8 receivers in football history. 9 In the 1996 National Football League draft, 10 the New York Jets used their first overall pick to 11 select 23-year-old Keyshawn Johnson from the 12 University of California. An electrifying presence 13 on the field, Keyshawn was a tough, durable receiver 14 with a high-octane competitive spirit. 15 Keyshawn was a consensus All American in 16 college in his last two years, and led USC to a win 17 in the 1996 Rose Bowl where he earned MVP honors for 18 his record-setting performance. 19 In the NFL Keyshawn continued his stellar 20 play for the Jets, the Tampa Bay Buccaneers, the 21 Dallas Cowboys, and the Carolina Panthers. He was 22 elected to the Pro Bowl three times, and earned his 23 Super Bowl ring as a starter on the 2002 Champion 24 Buccaneers. He missed only three games due to injury 25 in the 11 professional seasons. 26 In addition to his football success, he's a 27 devoted father, a successful business and real estate 28 investor, and has a successful career in broadcast 4 1 media. He was able to achieve all this despite 2 growing up in very difficult circumstance in 3 South Central Las Angeles, with only his mother, the 4 late Vivian Jessie, to raise him. 5 Since the early stages of his playing career 6 until today, Keyshawn has been under audit by the 7 Franchise Tax Board. The FTB started auditing 8 Keyshawn first in December of 1999. And we have a 9 timeline for you, which I believe is Exhibit A, that 10 contains the text. You can read it. It might be a 11 little tough to read up here. 12 So for the last 18 years the FTB has been 13 desperately trying to prove that Keyshawn was a 14 California resident during his playing career. A 15 position that is not only contrary to the available 16 evidence, but also to common sense. 17 During his full-time 11-year career, 18 Keyshawn didn't have a personal residence in 19 California, didn't work in California, and spent more 20 time outside of California than inside California. 21 But that hasn't stopped the FTB from pushing its 22 error-filled residency position for two decades. 23 FTB's position is based upon the fact that 24 Keyshawn invested in California real estate, visited 25 California from time to see family and friends, and 26 gave to charities here. 27 We readily admit that Keyshawn invested in 28 California properties for profit. We readily admit 5 1 that Keyshawn took care of those less fortunate than 2 himself in the community in which he grew up. And we 3 admit that he bought a house for his mom to fulfill a 4 childhood promise. But that doesn't make him a 5 California resident. 6 Because the issue here is not whether 7 Keyshawn is devoid of any ties to California during 8 the tax years at issue, rather the question is 9 whether he was a resident for tax purposes. 10 And to determine whether he was a resident, 11 you first need to determine where is his base of 12 operations. In residency cases we call that 13 domicile. Is it California or is it some other 14 state? 15 If it is California, then you ask, "Well, 16 were they outside California temporarily, like on 17 vacation or a limited work assignment?" Or was it 18 more involved than that. Like you're not sure when 19 you're going to come back, or you're gone 20 indefinitely, you may be back from time to time, no 21 set schedule. If your absence from California is 22 indefinite, then you are not a California resident. 23 If the opposite is true that you are based 24 in another state, then the question is posed in the 25 converse, "Are you in California temporarily, or are 26 you here indefinitely?" If you're here only 27 temporarily, again, you're not a resident of 28 California. And to answer that, we must look to the 6 1 facts of each tax year. 2 So let's first talk about 1996. Our 3 position, the correct position, is that Keyshawn was 4 no longer a California resident when he signed his 5 contract to play with the New York Jets. Remember 6 the circumstance here, he was in New York in the 7 midst of contract negotiations all summer long. And 8 it is August 6th when he and the Jets finally come to 9 terms, and a six-year contract is signed. He has 10 contract in hand, and he is out of California 11 indefinitely. 12 He's already staying in New York, by the 13 way. He was in a hotel in New York before he signed 14 the contract. After signing the contract, he stayed 15 at the team's facility in the month of August in 16 Hempstead, New York. 17 And then because he needed to get with the 18 team and the regular season was almost afoot, he 19 didn't have time to lease a regular home or buy a 20 home, he stayed in the residence, which is an 21 extended stay property, from August until December. 22 He received the first installment of his 23 signing bonus money on August 12, 1996 after he's 24 already out of California and after signing his 25 contract. So from August to December 1996 he lives 26 in New York. His physical presence during that 27 period is almost entirely New York. 28 The FTB has raised the point, which I'm sure 7 1 you may be asking in your heads, about his claiming 2 the Nevada domicile. We agree that he wasn't 3 domiciled in Nevada. We agree that during 1996, 4 before moving to New York, he was domiciled in 5 California. But why did he claim that? 6 The idea -- the idea was given to him by his 7 financial advisors to save on taxes, and he did 8 initially plan to live there. But it was bad advice. 9 It was terrible advice. Unfortunately, it happens 10 often. Twenty-three-year-old, recent college grade, 11 following the advice of his professional advisors. 12 And to underscore the point, it is well documented 13 that the same advisor who gave him that advice was 14 recently charged by the FCC with fraudulently taking 15 money from Keyshawn and falsely holding himself out 16 as a CPA. This happens more often than we'd like to 17 think with young, professional athletes. 18 So that was bad advice. Bad advice, right? 19 But that bad advice was offset by bad advice in the 20 state of California's favor in 1997 and 1998 when his 21 advisors had him file as a California resident, which 22 made absolutely no sense. He rented an apartment -- 23 I'm sorry -- leased a home -- I beg your pardon -- in 24 Long Beach, New York, January 1997. 25 And then the next year, in May of 1998, he 26 buys a house in Woodbury, New York. His wife Shikiri 27 and his young daughter Maia come to join him. But he 28 files as a California resident. California even had 8 1 a higher tax rate that year than New York. But he 2 got bad advice. So bad advice all the way around. 3 In 1999 he files as a nonresident. The FTB 4 accepts that return. 1998/1999 professionally for 5 Keyshawn makes two consecutive Pro Bowl appearances. 6 Despite his excellent play on the field, he starts to 7 get wind in early 2000 that he might be traded. And 8 he is, in fact, traded in April of 2000 to the 9 Tampa Bay Buccaneers where he signs an eight-year 10 contract. 11 He, Shikiri, and Maia moved to Florida where 12 they stayed in corporate housing until they find a 13 home. When they signed the contract, our position, 14 the correct position, is he is no longer a New York 15 resident, he's a Florida resident. That's where his 16 home is. That's where he's going to be. He's going 17 to be there indefinitely. 18 Within two weeks of signing his contract he 19 purchases a personal residence in Tampa, Florida. 20 Custom home on the waterfront near other well-known 21 athletes. Since it was a custom home under 22 construction, Keyshawn leased another home beginning 23 in May 2000 in the meantime. 24 Then he goes and gets a Florida driver's 25 license in 2000, registers to vote in 2000, actually 26 does vote in the November presidential election as a 27 Florida resident. He updates his estate planning 28 documents to reflect his Florida residency. And he 9 1 pays -- very important -- a Florida intangible tax, 2 which you only pay if you're a Florida resident. 3 Okay. Professionally, he puts up solid 4 numbers his first year in Tampa. 2001 he earns his 5 third Pro Bowl birth. It is a difficult time for 6 Keyshawn and his family as he and Shikiri separate 7 and eventually divorce. Shikiri takes the children 8 and goes to California where her support network is 9 located. But Keyshawn presses on with his work and 10 continues to live in Florida. 11 In 2002, as we mentioned, he achieves 12 championship glory in the Super Bowl, Super Bowl 37. 13 He leads his team in receptions and yardage as they 14 defeat the Oakland Raiders for the team's first ever 15 championship. 16 Keyshawn continues to live in Tampa until 17 2004 when the Bucs traded him to the Dallas Cowboys. 18 There he signs a four-year contract. Within a 19 month -- within a month of signing the contract, he 20 buys a home in Frisco, Texas. The FTB decides at 21 that point -- or conceded at that point -- I know 22 they may say otherwise now. But they concede that 23 he's a Texas resident as of that point, no longer a 24 California resident. And they end the audit period 25 right then. 26 So that's the background. Let's talk a 27 little bit about the FTB's audit, and in particular, 28 the physical presence factor. There's so much. I 10 1 mean, the file is miles long. Let's talk about 2 physical presence and we'll get to all the other 3 factors as much as we can on rebuttal. 4 So if you can turn to Exhibit 4, and we can 5 can take a look at the numbers, the physical presence 6 numbers presented by FTB counsel in their opening 7 brief, which we're going to use as the baseline here. 8 Some major, major problems with the FTB's 9 approach. First, the -- the physical presence day 10 count is based largely on credit card receipts, which 11 don't always reflect physical presence as we know. 12 They missed several days favorable to Keyshawn by 13 refusing to consider the basic NFL regular season. 14 And I'll give you examples of that in a second. 15 And, third, they don't account for the NFL 16 year-round calendar, which Keyshawn is going to 17 address. It's specifically off-season activities 18 like training camp, any camp, OTAs, organized team 19 activities that took place outside of California. So 20 specifics -- we're gonna give you specifics. 21 1996, first thing you'll notice, they don't 22 even have a calendar for 1996. They just say "see 23 transaction chart." Which is a red flag as far as 24 we're concerned. 25 If you look at the transaction chart in the 26 audit report for 1996, we see -- the transaction 27 chart is Exhibit 5. You'll see there are 134 credit 28 card transactions in California, 2 in Nevada, and 205 11 1 that are marked "other." If you look at the 205 2 marked "other," 114 of them are in New York, and they 3 almost all take place between the months of August 4 and December. 5 So he was clearly -- clearly outside 6 California at that time. But the FTB auditor did not 7 even consider whether he was a part-year resident of 8 California and a part-year resident of New York. 9 It's nowhere to be found in the audit report. 10 Okay. In terms of the actual day count 11 based on this transaction chart. It's riddled with 12 errors. On November 28, 1996 they had him in 13 California based on a credit card charge to a 14 Clifford and Wills in Lynchburg, Virginia. There are 15 just a few problems with that. 16 Number one, Clifford and Wills is a women's 17 clothing store. Number two, this is three days 18 before the Jets host the Houston Orlanders in New 19 York, so Keyshawn is in practice in New York. They 20 have him shopping for women's clothing in California. 21 And, third, there's no Lynchburg, California. The 22 FTB agent miskeyed "CA" instead of "VA," Lynchburg, 23 Virginia. But nevertheless, the FTB marked this down 24 as a California day. 25 November 22, 1996 they have him buying 26 office supplies in Montebello, California on the 27 Friday before the Jets travel to Buffalo to play the 28 Bills. Highly unlikely that Keyshawn is stocking up 12 1 on post-it notes, printer paper, office supplies when 2 he's got a game across the country a few days 3 afterwards. But the FTB marked it down as a 4 California day anyway. 5 On August 28, 1996 they have him hanging 6 around a tire shop in Los Angeles based on a credit 7 card charge. Again, this is -- this is two days 8 before his professional football debut on the road in 9 Denver, and they've got him in a tire shop in LA. It 10 makes no sense. 11 Clearly somebody used his card to take care 12 of some vehicle, and clearly Keyshawn was with -- in 13 New York practicing with his team getting ready to 14 make his professional debut in November. 15 There's so many examples. Let's just move 16 on to 2000 to 2002. You can see the day count. So 17 many problems, it's -- the numbers are totally 18 unrealistic, first of all. They're far, far too low. 19 They refuse to give Keyshawn credit for several home 20 games, when it's a matter of public record that he 21 was playing in Florida on specific days during this 22 three-year stretch. 23 Here's an example: 10/29/00, FTB does not 24 count this as a Florida day. Guess what, Keyshawn 25 was in Tampa in a home game against the Vikings where 26 he caught 6 passes for 121 yards and a touchdown. 27 12/19/01, home game against the Lions, 28 Keyshawn, 10 catches, 101 yards and a touchdown. FTB 13 1 doesn't have this as a Florida day. 2 9/8/02, another similar error. FTB doesn't 3 count this as a Florida day, but we know Keyshawn 4 caught five passes for 76 yards in Tampa against the 5 Saints. This is a matter of public record. 6 2002, if you look at the calendar -- this is 7 unbelievable -- FTB has given Keyshawn credit for 8 just one Florida day in the entire month of 9 September. That is smack in the middle of the 10 regular season. This is how skewed and unreliable 11 their day count is. 12 And our last point about 2000 to 2002 is 13 that FTB is using the day count numbers from the 2005 14 audit report, not the more taxpayer-favorable numbers 15 in the 2008 protest. And that's in Exhibit 7. 16 If you look at those numbers, which we 17 disagree with, they're still -- they're still riddled 18 with problems and errors. But if we accept them at 19 face value, every year his physical presence in 20 Florida is greater than in California. 21 So 2003, I mean, I'll just -- we don't have 22 enough time to go through all of this. But I'll 23 just -- one more example in '03. I'll give you one 24 for each year. 25 July 2, they have him in California. Flight 26 records confirm he's in New York flying to London. 27 In 2004, it's the short year, not much of a sample 28 size. But what they don't tell you is he's not 14 1 spending as much time in Florida, because he's 2 spending time in Texas. Because he knows he's gonna 3 be traded to the Cowboys. So he's in transition 4 during that period. That's not reflected properly or 5 at all in the audit report. 6 So to summarize all this -- I want to give 7 Keyshawn a chance to get up. But to summarize all 8 this incredibly sloppy audit, even if we accept the 9 sloppy audit numbers, the numbers are still in his 10 favor. 11 And then one thing that he's going to tell 12 you right now, he's gonna walk you through the 13 reality of a typical NFL season. I read somewhere -- 14 not sure if it was in counsel's brief -- that this is 15 somehow a five-month gig. That is incredibly, 16 incredibly disrespectful to professional athletes 17 like Keyshawn who play this very physically demanding 18 sport, take great pride in their craft, and commit to 19 the year-round obligations with their respective 20 team. These are professionals, Members of the Board. 21 Not part-timers. 22 So at this point with the Board's 23 permission, I'd like to ask Mr. Johnson to address 24 this exhibit. 25 MR. JOHNSON: Thank you, Members of the 26 Board. 27 So I want to give you just a twelve-month 28 calendar of how a professional football player, in 15 1 particular my 11 years, went for me. It has changed 2 since then slightly, but as you -- you start at 1996. 3 I was drafted around this time the month of 4 April, organized team activities and mini camps 5 except the draft week. There's nothing going on. So 6 in the purple, it reflects the draft. The green is 7 where I was at in playing for the New York Jets or 8 Tampa or the Dallas Cowboys, Carolina Panthers. 9 And as you move into the month of May, 10 again, it's the organized team activity mini camps. 11 And as you get into the month of June, you get back 12 into organized team activities. 13 Now, at the end of June and into early July, 14 as you can see, there's vacation time, personal time. 15 This is your basic, you know, three-and-a-half, four 16 weeks to kind of get away from football. And you 17 dive right back into it late July. 18 All of August you're with your teams in 19 training camps. You're in a hotel somewhere in 20 New York or Carolina or wherever I was playing, or 21 you're in the dorm rooms at, you know, Disney World. 22 And then obviously the regular season kicks 23 up in the month of September, October, November, 24 December. Fortunate for me, in my 11 years, I think 25 I had an opportunity to play in the playoffs six 26 times, which rolls into the month of January. 27 I had an opportunity to play in the Pro Bowl 28 three times and alternate a fourth time, which takes 16 1 me into the month of February. Which the Super Bowl 2 rolls into the beginning of February, Pro Bowl 3 slightly after that. So you typically are still 4 playing football depending on your playoffs, your 5 chances of getting to the Super Bowl at the beginning 6 of February. 7 Then -- now you got off time, you're kind of 8 off. You're a little bit off in March. You roll 9 right back into OTAs, mini camps, and as you can see, 10 it continues to go on in a full cycle in my 11 years 11 in the National Football League. Not the month of 12 August, September, October, November, December like 13 Marty said. This is not a five-month job. You 14 cannot be a professional athlete at the level that I 15 played at if you only are with your team for five 16 months out of the year. 17 So hopefully I kind of explained it as clear 18 as possible to you guys. And that's pretty much what 19 it is. 20 Thank you. 21 MR. DAKESSIAN: So at this point we will 22 reserve the rest of our time for rebuttal. And thank 23 you for the opportunity. And we'll answer any 24 questions that we have regarding the other residency 25 factors. 26 MS. HARKEY: Thank you very much. 27 To the Department, please introduce yourself 28 for the record. And you can take up to 20 minutes, I 17 1 guess. 2 MR. RILEY: Good morning, Madam Chair and 3 Members of the Board. I'm Jason Riley, and this is 4 Ron Hofsdal. And we represent California Franchise 5 Tax Board in this matter. 6 The primary legal questions in this appeal 7 are was Mr. Johnson domiciled in California, and was 8 Mr. Johnson a California resident? The answer to 9 both questions is yes, he was at all times both a 10 California domiciliary and resident. Whenever 11 absent, he always chose to return home to California. 12 This is the law. California imposes a tax 13 on the entire taxable income of all its residents. 14 And the law defines California residents as those 15 domiciled in California, but outside California for a 16 temporary or transitory purpose. 17 What is domicile? Under the law, it is that 18 one place a taxpayer has the most settled and 19 permanent connections. It's where they return 20 whenever absent. 21 While a taxpayer can have more than one 22 residence, the California Supreme Court has held a 23 taxpayer can only have one domicile. To define a 24 resident, California first asks, is the individual 25 domiciled in California? 26 In the additional briefing, Mr. Johnson has 27 conceded California domicile for at least the 28 earliest taxable year at issue, 1996. As 18 1 Mr. Johnson was born, raised and attended university 2 in California, respondent's position remains that he 3 was at all times domiciled in California. 4 Moreover, since Mr. Johnson has conceded 5 California domicile, the test for residency is was 6 Mr. Johnson outside California for other than a 7 temporary or transitory purpose? 8 The answer in this appeal is yes. Under the 9 law, any individual who is a resident of this state, 10 continues to be a resident even though temporarily 11 absent from the state. And Mr. Johnson's absences 12 from California for the temporary purpose of seasonal 13 employment. 14 During the taxable years at issue, 15 Mr. Johnson worked seasonally as a professional 16 athlete. His period of employment ran five to six 17 months during each taxable year at issue. And as in 18 your Board's cases dealing with professional 19 athletes, the appeal of Morgan, the appeal of Childs, 20 the appeal of Ochangco and appeal of Selma, 21 (phonetic) Mr. Johnson returned home to California 22 for six to seven months each and every off season. 23 In addition, as will be clear, all 24 Mr. Johnson's closest connections, his wife, his 25 children, his homes, his family, his businesses, and 26 his presence are with California. And as with other 27 professional athletes, appeal of Morgan Childs, 28 Ochangco and Soma, he suffered no California ties, 19 1 instead, he increased his California ties in each 2 taxable year. 3 Since Mr. Johnson was domiciled here, under 4 the law, he remains a California resident unless he 5 demonstrates he was absent from California for other 6 than a temporary or transitory purpose. 7 For 1996, the first taxable year at issue, 8 Mr. Johnson claimed to be a Nevada resident based on 9 little evidence. While Mr. Johnson -- while the 10 taxpayer is now not mentioning Nevada at all and 11 claiming to be a New York resident, the -- this 12 New York resident was never briefed throughout the 13 briefing process. So just an aside there. 14 While Mr. Johnson performed his seasonable 15 work in New York and New Jersey for the New York Jets 16 from August to December of 1996, he spent the 17 majority of the year in California. He attended USC 18 and graduated with a history degree. He spent more 19 than $50,000 and made 189 financial transactions in 20 California. 21 He became an LA Lakers season ticket holder. 22 He was building a $1.2 million 6,500 square-foot home 23 in Tarzana, California and renting another apartment 24 for Shikiri and the baby in Los Angeles, California's 25 Westwood neighborhood. 26 And in the middle of the NFL season, 27 October, he received the New York Jets permission to 28 fly home to Los Angeles, California rather than 20 1 return on the team plane to New York. And, again, in 2 November, the New York Jets gave him permission to 3 fly home to Los Angeles, California during the NFL 4 season. 5 We can read a quote from Mr. Johnson's 6 memoirs of his rookie year to get a sense of why he 7 contemporaneously considered California his home. 8 "Everybody needs a break. You played hard, 9 take a break, get away from this, all this. To me 10 that meant getting my butt to Los Angeles. I needed 11 to get far, far away from this mess, back to 12 something familiar, back to something positive, back 13 to where I wasn't a player on a one-in-ten team. And 14 all it did was make me want to get home for good even 15 more. 'Five more games,' I kept telling myself. 16 Five more games and I'm back on my home turf where 17 life was sane." For Mr. Johnson, that's California. 18 What did he do in Nevada? He rented a room 19 for $300 per month, he made eight financial 20 transactions, and he spent a total of $6.96 in Nevada 21 on his credit cards. He's not a Nevada resident. 22 Remember, for an individual domiciled in 23 California, the test is was he absent from California 24 for other than a temporary or transitory purpose? 25 Under the law, Mr. Johnson was a California resident. 26 Remember, Mr. Johnson has conceded 27 California domicile for 1996, so the proper test asks 28 was he absent for other than a temporary or 21 1 transitory purpose? 2 Again, we can read from Mr. Johnson's 3 memoirs to get a sense of his intent. 4 "As my plane home from New York got close to 5 LA, I felt something huge being lifted right off my 6 shoulders, and the dark cloud over my head starting 7 to break up. As soon as we landed, I was heading 8 straight to the apartment to see my girl and my 9 daughter, Maia, who had just turned one." 10 California is home for Mr. Johnson. 11 Moving on to 1997, Mr. Johnson filed a 12 California resident return, and he still played for 13 the Jets, and he remained a California resident and 14 domiciliary. 15 In 1998, appellants were married at a 16 Beverly Hills hotel, they filed a joint California 17 resident return, their son Keyshawn Jr. was born in 18 California, Mr. Johnson purchased a $1.2 million 19 parcel of land, and $800,000 for fixtures to open a 20 Beverly Hills, California resident -- sorry -- a 21 Beverly Hills, California restaurant. 22 And appellants prenuptial agreement 23 describes their marital abode as follows: Shikiri 24 and Keyshawn are presently residing and intend to for 25 the immediate future continue to reside together in 26 the Tarzana home. Which confirms Mr. Johnson's 27 absences while seasonally employed in New York and 28 New Jersey were temporary or transitory. 22 1 Of this Tarzana home, Mr. Johnson's memoirs 2 also state -- also say, "I'm going to play with my 3 daughter and move my entire family into the house I'm 4 building in the valley. We're going to barbecue 5 every night and swim every day." 6 In May 1999, Mr. Johnson opened his Beverly 7 Hills restaurant, Rain. He also purchased an 8,435 8 square-foot home in Calabasas, California and added a 9 2,000 square foot gymnasium so he could train in the 10 off season. And he incorporated Keyshawn Capital 11 Development, LLC in California in June of 1999. 12 Again, it's important to note that during 13 this time, Mr. Johnson's seasonal employment occurred 14 in New York and New Jersey at a time when he was 15 domiciled in California. California was the one 16 place where he returned whenever he was absent. Such 17 that he enjoyed the benefits and protections of this 18 state. 19 As your Board decided in the appeals of 20 Morgan and Childs, the focus must be on where 21 Mr. Johnson spent the off season. Invariably, at the 22 end of each NFL season, Mr. Johnson returned to his 23 home in California. 24 In 2000 Mr. Johnson traded his seasonal 25 employment in New York and New Jersey for seasonal 26 employment in Tampa, Florida. And despite this 27 change, he did not sever his settled and permanent 28 California ties, save for a Florida driver's license 23 1 and a Florida voter registration. 2 His children went to school in California, 3 he continued operating his Rain restaurant in Beverly 4 Hills, California. He was physically present in 5 California for more days than he was in Florida. And 6 he still owned his 10,435 square foot Calabasas, 7 California home. 8 Mr. Johnson must demonstrate that his 9 residency changed, but it doesn't change when he 10 invariably returns to California. And he ramps up 11 and remains his California ties, rather than severing 12 his California ties. 13 In 2001 he leased a 3,500 square foot 14 Beverly Hills, California home and purchased a 1,700 15 square foot Beverly Hills, California apartment. 16 Appellants opened the Beverly Hills clothing 17 boutique, Shikiri Collection, and invested in a $75 18 million Los Angeles retail development project. 19 He hosted a charity golf tournament in 20 Malibu, California in April of that year, and his 21 children attended an elementary school on the UCLA 22 campus. 23 In Florida, appellants entered into a 24 contract to purchase a 4,200 square foot Tampa house 25 in August, and he held a financial interest in a 26 Florida restaurant, Profusion. Still, his California 27 ties continued without break and far outweighed his 28 Florida ties. 24 1 In 2002 Mr. Johnson purchased land and 2 constructed a $3.3 million 9,600 square foot family 3 home in Los Angeles. But in December of 2002, 4 Mr. Johnson filed for divorce as the plaintiff in 5 that action. He also rented a home in Pleasonton, 6 California for Shikiri and the children. 7 At the time Mr. Johnson filed for divorce in 8 December of 2002, he admitted in court documents that 9 he was a California resident since at least June of 10 2002. This use of California courts is a perfect 11 example of the benefits and protections Mr. Johnson 12 has received from the laws and government of 13 California. 14 In 2003, he continued his use of the 15 California courts receiving a dissolution of marriage 16 judgment from a California court. Mr. Johnson also 17 purchased the Pleasonton home for $1.975 million and 18 invested in a $123 million real estate development in 19 Los Angeles. 20 In Florida, Mr. Johnson's seasonal 21 employment in Tampa came to an end when in November 22 he was deactivated by his seasonal employers. In 23 January of 2004, Mr. Johnson had his Florida personal 24 belongings shipped home to Los Angeles. In April, he 25 entered into contract to purchase land in Calabasas, 26 California, and he eventually built an 11,746 square 27 foot home on this land. 28 Despite moving his seasonal employment, 25 1 Mr. Johnson maintained and increased his California 2 ties. The constant throughout the examination period 3 is California. He always came home to California. 4 He was a California resident before his playing 5 career; a California resident during his seasonal 6 employment as professional athlete; and following his 7 playing career, he has filed California resident 8 returns. 9 Applying your Board's decisions dealing with 10 professional athletes, Morgan, Childs, Ochangco and 11 Selma to the facts of this appeal, Mr. Johnson was a 12 California resident all along, such that he enjoyed 13 the benefits and protections of this state. 14 Let's focus on some of the other factors 15 from your Board's decision in the appeal of Brag. 16 The number of Mr. Johnson's financial 17 transactions throughout the years -- the taxable 18 years at issue favor California on a three-to-one 19 ratio on average. That is he made three times the 20 transactions in California as in Florida. And when 21 we examine the dollar amount of those transactions, 22 the ratio jumps to seven-to-one in favor of 23 California. His church was in Los Angeles, 24 California. 25 Over the taxable years at issue, Mr. Johnson 26 made more than 100 payments to California medical, 27 legal and financial professionals. He also made one 28 payment to a Florida medical professional. 26 1 Under any objective standard, Mr. Johnson 2 has not severed his California ties. He chose to 3 remain a California domiciliary and resident. And 4 his Florida ties are insufficient in nature to 5 overtake his foundational and continuing California 6 ties. 7 Again, looking to your Board's decisions 8 dealing with professional athletes, Morgan, Childs, 9 and the like, and applying that law to the facts in 10 this appeal, it is clear, Mr. Johnson was and 11 remained a lifelong California resident. A change in 12 domicile requires a clear change with credible 13 support. Mr. Johnson remained a California 14 domiciliary. 15 The residency statute in your Board's 16 decision in the appeal of Brag also support 17 respondent's position. Under California law, 18 Mr. Johnson is a California resident. Respondent's 19 domicile and residency determinations were correct, 20 and it is fair for Mr. Johnson to contribute to 21 California support. 22 With respect to any delay that occurred with 23 respect to this audit, while the audit -- the audit 24 did commence in 1999, Mr. Johnson has gone through 25 several different legal practitioners. And this case 26 was deferred on at least four -- four occasions for a 27 total of almost four years, May of 2008 to May of 28 2009, December of 2010 to December of 2011, October 27 1 of 2014 to May of 2015, and February of 2016 to 2 November of 2016 on the request of the taxpayer or 3 the taxpayer's representatives. 4 So -- sorry? 5 MR. HOFSDAL: And -- and they requested to 6 be consolidated. 7 MR. RILEY: Right. And -- and also, because 8 there were different tax years at issue, you know, we 9 have the 1996 tax year, and then we've got a second 10 cycle, 2000 to 2002, and then a third cycle, 2003 to 11 2004, those -- those -- each of these audits, when 12 they went to protest, they were eventually 13 consolidated after the 2003 to 2004 MPA was issued on 14 May 6 of 2010. And the -- all of the tax years then 15 proceeded through protest and Franchise Tax Board 16 issued a notice of action for 1996 to 2004 on 17 December 27th, 2012. 18 Appellants filed their opening brief in 19 2013; respondent filed its opening brief in 2014. 20 Thereafter -- excuse me -- the case was delayed twice 21 from August -- October 14th to May 15th, and again 22 from February 16th to November 16th. Which brings us 23 to 2017 when appellants filed their reply brief and 24 respondent filed its reply brief in 2017. And we are 25 now at the hearing. So that addresses any delays. 26 Thank you. I'm available for questions 27 should your Board have any. 28 MS. HARKEY: Thank you very much. 28 1 You have some rebuttal time. 2 MR. DAKESSIAN: Sure. 3 So the first thing I'm gonna say, and -- and 4 I like Mr. Riley, but I'm not going to continue to 5 let him disrespect my client by calling him a 6 seasonal employee. That just really gets under my 7 skin. This man was a professional athlete full time, 8 and played 11 seasons in the National Football 9 League. So let's dispense with this referring to him 10 as a seasonal employee. That just really gets under 11 my skin, number one. 12 Number two, the notion that he always 13 returned to California is simply not correct. 14 Mr. Johnson, in the -- in the purple space 15 that's marked up on that chart over there, that 16 represents the free time that you had; isn't that 17 correct? 18 MR. JOHNSON: Yes. 19 MR. DAKESSIAN: And -- and -- would -- would 20 it always be the fact that you would return to 21 California during that purple time? 22 MR. JOHNSON: No. 23 MR. DAKESSIAN: Where else would you go? 24 MR. JOHNSON: Travel, vacations, Hawaii a 25 lot, because of the Pro Bowl obviously, um, New York, 26 London, Par -- I mean, Jamaica. I mean, we went a 27 lot of different places. 28 MR. DAKESSIAN: Thank you. Thank you. 29 1 In terms of the Morgan, Childs, Ochangco 2 cases that the Franchise Tax Board referred to, I'd 3 like Mr. Sislyan to address the differences between 4 those cases and the cases that -- and the case that 5 we have here today. 6 MR. SISLYAN: Thank you. 7 So the Franchise Tax Board mentions the 8 Childs and the Morgan cases a number of times as if 9 there's some litmus test there. If a professional 10 athlete returns to California during the off season, 11 then he's a California resident. 12 First of all, there is no litmus test. And, 13 secondly, that's not true here as we just discussed. 14 With respect to that litmus test, just in 15 according to the briefing that FTB has put together, 16 they say the litmus test came up in the Morgan case, 17 and that's certainly not the case. Because in the 18 Morgan case, prior to the years at issue, for nine 19 years Mr. Morgan returned to California during the 20 off season. And the FTB did not have an issue with 21 that. The issues came up during the years at issue 22 there, and the facts there were as such, and the 23 facts in our case are distinguishable. 24 In Morgan, the taxpayer owned the California 25 residence. And here, Mr. Johnson has never owned a 26 California residence during the years at issue. 27 Secondly -- this is very important -- 28 Mr. Morgan claimed the California -- his California 30 1 home as his principal residence on his federal tax 2 return. This was never claimed by Mr. Johnson during 3 the years at issue. So that's a big red flag where 4 Mr. Morgan, himself, held himself out to be a 5 California resident. This has never happened here in 6 our case. 7 Secondly, Mr. Morgan also claimed the 8 California homeowners exemption, again, holding 9 himself out to be a California resident. This never 10 happened here. 11 He retained his California driver's 12 license, whereas, here, Mr. Johnson held a license in 13 the state where he lived. Not California. And then 14 further, Mr. Morgan, in that case, claimed and was 15 granted California residency status to attend a 16 California University for tuition purposes. That's, 17 again, red flag. He's holding himself out to be a 18 California resident. 19 And then further, you know, the last thing 20 was he returned to California during every baseball 21 off season. So that returning to California, which 22 isn't even the case here during the off season, is 23 just one of many factors. 24 The main point is that in Morgan -- and this 25 happened in Childs as well -- the taxpayers 26 themselves held themselves out to be California 27 residents, whereas that's not the case here. 28 MR. DAKESSIAN: Thank you, Mr. Sislyan. 31 1 And the other thing I wanted to take note of 2 is in terms of the financial transactions and the 3 disparity there, Mr. Johnson, is it not true that you 4 had your financial advisors here in California making 5 transactions on your behalf? 6 MR. JOHNSON: Yes. 7 MR. DAKESSIAN: And how would that work? 8 Would you have, like, a credit card on file with 9 them? 10 MR. JOHNSON: A credit card on file with 11 them, as well as my mom. 12 MR. DAKESSIAN: Okay. And they would take 13 care of paying the bills and so forth for you? 14 MR. JOHNSON: Whatever -- whatever -- yeah, 15 bills, you know, shipping of things. Just whatever I 16 needed for the most part. 17 MR. DAKESSIAN: Okay. And then in terms of 18 the -- the investments, counsel mentioned that there 19 was some properties that you purchased. We mentioned 20 the Tarzana property. Can you just confirm again for 21 the Board, that was bought for your mom. Why did you 22 buy that for your mom? 23 MR. JOHNSON: Yeah, the Tarzana home was 24 purchased for my mother back in 1996. The moment 25 that I got drafted, I kept my promise to my mother. 26 Growing up -- you guys are making me tear up now. I 27 made a promise to my mom that I would purchase her a 28 home, because of how we grew up. And at a time 32 1 that -- you poor and you have dreams and aspirations 2 to help your parent out. So my mom was always a 3 California person, this is where she wanted to be. 4 So I purchased my mom a home. Simple and plain, 5 nothing else to it. 6 And to this day, my mom still has the home. 7 Even though she's deceased, we rent the house out. 8 It was simply a home purchased for my mom, not 9 purchased for me. It was purchased for my mom. And 10 that's pretty much it. 11 Sorry I choked up. I just -- 12 MR. DAKESSIAN: It's okay. It's okay. Do 13 you want to compose yourself for a moment? 14 MR. JOHNSON: No, I'm fine. 15 MR. DAKESSIAN: Okay. 16 MR. JOHNSON: You know, just thinking about 17 the promise, thinking about the promise that I'm 18 gonna graduate from college and all that sort of 19 stuff. But I'm good. I'm good, Marty. 20 MR. DAKESSIAN: Okay. 21 Keyshawn, can you -- can you tell us about 22 the investments that you made in the California 23 properties that the Franchise Tax Board has 24 identified? 25 MR. JOHNSON: Um, if you know about me and 26 growing up until I graduated to go to the New York 27 Jets, I -- all of my financial advisors, my 28 professional people are all part of California. And 33 1 California was -- it still is -- rich in soil and 2 real estate. So I've invested in a number of 3 properties starting with my mom's home, to a large 4 home in Calabasas that I bought, added on a gym, sold 5 eventually to another professional athlete because it 6 was a spec house. 7 So we did that. Then sold that, moved the 8 money to purchase another spec house. Sold that one 9 eventually. Moved the money there, purchased a 10 condominium in Los Angeles, rented it out, eventually 11 sold that. Eventually bought more land in Calabasas, 12 built a large home, sold that. Joint ventured with 13 Esquire magazine on another piece of property in 14 Beverly Hills, built a large house, sold that. 15 Bought a piece of property in Beverly Hills to start 16 a southern food restaurant, owned the real estate, 17 eventually sold that. 18 So a lot of my transactions, investments are 19 California because my financial people are here, my 20 attorneys are here. I know California landscape. I 21 know how rich the soil is in terms of real estate. 22 And it's a good place to invest your money. 23 I'm not the only person that invests your 24 money in California. There's people that are from 25 other countries that invest in California. I'm not 26 the only person. So I guess that maybe that answers 27 those questions. 28 MR. DAKESSIAN: Thank you. 34 1 How about your personal affects in terms of 2 your trophies, jerseys, your Super Bowl ring, where 3 would that be? 4 MR. JOHNSON: My Super Bowl ring is with 5 me -- that's with me. Most of my stuff was all with 6 me except some things that I may have given to my 7 mom. Like my degree, I gave to my mom to hang over 8 her bed. But everything else was with me. I mean, 9 my jerseys, my trophies, everything was with me. I 10 mean, I want it in my home where I was living at 11 permanently. 12 MR. DAKESSIAN: And the significance of that 13 is the fact that the FTB refuses to recognize, which 14 is where your personal affects are is a very, very 15 key determinant to where you believe you are living. 16 If you're on vacation you do not take your Super Bowl 17 ring, your trophies, your jerseys, all that stuff 18 follows you wherever you are. 19 Bank accounts, one other thing on rebuttal, 20 there's -- you know, they go through all these 21 contortions and imaginations to come up with 22 financial analysis, this, this and that. If you look 23 at the bank accounts -- if you look at the bank 24 accounts, in California versus Florida, more bank 25 accounts in Florida versus California for '00, '01, 26 and '02. 27 And New York, he was just, you know, leaving 28 the state. And in '03 and '04, he had 7 accounts in 35 1 Florida, 12 in Texas, and 9 accounts, 2 of which were 2 closed. So the bank account total is in his favor as 3 well. 4 And then -- yes, the Pleasonton -- the 5 Pleasonton home, would you want to address that, 6 Mr. Johnson? 7 MR. JOHNSON: There's a -- you guys have 8 the list -- 9 MR. DAKESSIAN: They have the -- yeah. 10 MR. JOHNSON: The home that they're 11 referring to that I purchased in Pleasonton is so, so 12 incorrect. That is Shikiri's home. That was her 13 house in the midst of our divorce. The only thing I 14 did was give her the money for the down payment. My 15 name is nowhere on the title. I did not cosign. I 16 did not write off on anything. It was totally hers 17 and my kids. 18 MR. DAKESSIAN: Thank you for that, 19 Mr. Johnson. 20 You were also a member of a church in 21 Florida; is that not correct? 22 MR. JOHNSON: Yes. 23 MR. DAKESSIAN: What was the name of that 24 church, do you remember? 25 MR. JOHNSON: Walls -- walls -- something. 26 MR. DAKESSIAN: Without Walls? 27 MR. JOHNSON: Without Walls -- Without 28 Walls. 36 1 MR. DAKESSIAN: And I know the FTB wants to 2 punish you for giving to charities in California, 3 which I found -- I find outrageous, quite frankly, 4 but you also did give to charities in Tampa; is that 5 not true? 6 MR. JOHNSON: I've given to charities in 7 New York, Tampa, North Carolina, Dallas. I've held 8 fundraisers in every single state that I've played 9 in. I mean, I did -- holiday time came around, I was 10 Santa Claus. Turkey day, I was -- I did all those 11 things that I dreamed about that I wanted when I was 12 a kid, basically. 13 I mean, I started my foundation, we gave 14 golf tournaments. I rebuilt and revitalized 15 intercity communities throughout the United States. 16 MR. DAKESSIAN: Thank you for that. 17 Ms. Richmond, how much more time do we have? 18 MS. RICHMOND: Actually, your time just 19 expired. 20 MR. DAKESSIAN: Okay. Thank you. 21 MS. HARKEY: Perfect timing. 22 Member Runner. 23 MR. RUNNER: Yeah. Let me -- let me just 24 ask, in terms of -- let me ask FTB. 25 In terms of the calendar up there that was 26 pointed out in regards to the schedule for a 27 professional football player, how do you disagree 28 with that? 37 1 MR. RILEY: First of all, I would say that 2 that's not an accurate representation of the 1996 3 taxable year because -- 4 MR. RUNNER: Okay. That's fine. Let's skip 5 that and go to the issue in general. 6 MR. RILEY: Right. This is also the first 7 time that we are seeing this, you know, this 8 morning. 9 MR. RUNNER: Hold on. 10 MR. RILEY: I'm saying that I am seeing this 11 particular graphic. 12 MR. RUNNER: Okay. Okay. 13 MR. RILEY: Okay. 14 MR. RUNNER: The reason I ask is you keep 15 referring to him as seasonal. And I just wonder what 16 your basis of calling him a seasonal employee is. 17 MR. RILEY: Well, I think the seasonal -- my 18 reference to him as a seasonal employee is 19 representative of things such as the employment 20 contracts wherein it says, these are the events that 21 you absolutely have to be here for. You've got to be 22 here for the -- the July camp, you've got to be here 23 for any preseason games in August, you've got to be 24 here for the 16 regular season games from September 25 to December, and any playoff games that might occur 26 through January. 27 So our basis for the five- to- six month 28 schedule that we are, you know, referring to is based 38 1 on in part the -- the employment contracts that 2 Mr. Johnson had with various franchises. 3 When we're talking about the, you know, days 4 of presence, why doesn't this match up with, you 5 know, with this -- you know, this is a generalization 6 of a typical NFL player calendar year. 7 MR. RUNNER: Mm-hm. 8 MR. RILEY: Okay. So this might not, you 9 know, be a perfect example of what Mr. Johnson's 10 experience was. Now, you know, we heard a bit about, 11 well, you know -- 12 MR. RUNNER: Where -- where is it -- where 13 is it in error? 14 MR. RILEY: I would say that it's not 15 necessarily in error. I would say it is a 16 generalization. Where an athlete works out, they 17 don't necessarily have to work out in the off season 18 in -- 19 MR. RUNNER: Where would you -- again, I 20 assumed he knows his schedule and you don't. So 21 where -- since he says this is his schedule, where in 22 that schedule do you believe he is incorrect? 23 MR. RILEY: I would say that our -- our 24 auditors compiled a list of where we believed 25 Mr. Johnson to be based on his financial 26 transactions, based on newspaper articles 27 contemporaneous to the time. Wherein, for example, 28 Mr. Johnson said I'm going to spend the off season at 39 1 my new 10,000 square foot Calabasas house that's got 2 a 2,000 square foot gym for me to work out in. And 3 maybe I'll go and visit Hawaii or Europe also. But 4 I'm going to be here in California during the off 5 season. 6 These are contemporaneous Los Angeles Times 7 reports that placed Mr. Johnson in California in the 8 off season. 9 MR. RUNNER: Okay. Let me go -- let me 10 go -- just a couple of questions. 11 Number one, in terms of a contract -- again, 12 I've never seen an NFL contract -- yes. Is -- is -- 13 is that correct? I mean, it actually lays out 14 specific dates? 15 MR. JOHNSON: Incorrect. Your contract is a 16 year-round contract depending on how you negotiate 17 the moneys. Obviously the money becomes present 18 value which most people see as a good contract. It 19 could be stretched out. You don't necessary want 20 that. In there it says, you know, mini camps, 21 obviously your duties from a marketing standpoint, 22 um -- training camp, mini camp, OTAs, all of those 23 sort of things. 24 The OTA is one of the most important things 25 that you have to be at, because it gets you ready for 26 the season, training, all of the things. 27 You can't be -- as I explain to you again -- 28 before, you can't be a professional athlete at the 40 1 level I am to go five or six months. It doesn't 2 exist. It doesn't -- you can't. 3 MR. RUNNER: Okay. 4 Let me go -- did you review his contracts? 5 MR. RILEY: Yes. 6 MR. RUNNER: So you believe his -- that his 7 contracts did not talk about marketing re -- 8 marketing requests or training camps, those were not 9 part of that contract? He's wrong? 10 MR. RILEY: Excuse me. 11 There are certain clauses within the 12 contract that discuss marketing. But it doesn't 13 require Mr. Johnson to be physically in, say, Tampa 14 for the entire year. 15 MR. RUNNER: Right. 16 MR. RILEY: The -- the focus -- the real 17 focus of these contracts are the mini camps from 18 July, the preseason and the -- the regular season and 19 playoffs. And then, you know, it also mentions, 20 look, if you make the Pro Bowl, then you're also 21 required to go and play in the Pro Bowl. 22 MR. RUNNER: Well, just by definition, 23 doesn't that get -- I'm just, you know, if it's July 24 through, again, he played Pro Bowl, so -- in -- in -- 25 in season playoffs, that's seven months and eight 26 months, right? 27 MR. RILEY: Well, if you play the Pro Bowl, 28 I believe, in the, you know -- say, in the 2000 -- 41 1 MR. RUNNER: During those years it was, 2 what, before the -- before the -- after -- it was 3 after Super Bowl during those years. 4 MR. JOHNSON: Mid to late February. 5 MR. RUNNER: Yeah. 6 MR. RILEY. Right. So you've got 7 Mr. Johnson -- in, say, 2000, Mr. Johnson's playoffs 8 ended in mid January. 9 MR. RUNNER: Yeah. 10 MR. RILEY: And then a month later he plays 11 in the Super Bowl. 12 MR. RUNNER: Right. 13 MR. RILEY: I'm sorry, the Pro Bowl. So in 14 2000 we've got Mr. Johnson in California on many of 15 those days. And it's -- 16 MR. RUNNER: Okay. Even on that scenario, I 17 guess I still count seven to eight months, July to 18 January, right? 19 MR. RILEY: Upon this chart or -- 20 MR. RUNNER: You said mini camps started in 21 July. 22 MR. RILEY: I did -- I did say that it 23 started in July. 24 MR. RUNNER: Okay. So I just counted the 25 months, one, two, three, four, five, six, seven -- 26 seven months. And then you're saying the Super Bowl 27 should be discounted -- or the Pro Bowl should be 28 discounted. So either the seventh or the eighth 42 1 month. 2 MR. RILEY: So if Mr. Johnson plays from mid 3 July through mid January, that's only six months. 4 MR. DAKESSIAN: Well, can I -- 5 MR. RUNNER: Okay. It's an interesting 6 discussion. Let me just -- let me go down another 7 route too. 8 And, again, you said the placement of those 9 times were based upon certain financial criteria. 10 They've identified some issues with credit cards. 11 Did we review which credit cards made sense? I mean, 12 such as a credit card expenditure the day before a 13 game that's halfway across the country. Was there an 14 evaluation done in regards to the -- to the logic as 15 to whether or not? 16 Because, again, it seems perfectly clear to 17 me that, especially in the circumstance -- and, 18 again, I think part of our challenge at this point 19 when we get these kinds of cases is that we look at 20 residency cases like a box. And this box is like 21 supposed to be this normal box, you know. So we 22 think of a guy, who, you know, has a job. He gets 23 transferred to Chicago, and he moves his family, and 24 he moves his house, and he moves everything to 25 Chicago, his bank accounts and all those things go to 26 Chicago, because that's where he's going to live. 27 This -- these kind of issues don't fit into 28 that box. Because it seems to me pretty logical 43 1 that, again, if you're traveling all over the country 2 doing things, that you may indeed leave a credit card 3 with someone else in order to do transactions. 4 Did we -- did we identify the fact that 5 these were truly his transactions, or they were just 6 transactions to the card? And did we try to see if 7 they made sense in terms of schedule? 8 MR. RILEY: I guess two points, Member 9 Runner. With respect to each of these cards, we 10 requested information of who is the primary user of 11 each of these cards. And we, you know -- 12 Mr. Johnson's financial advisors were here in 13 California. 14 MR. RUNNER: Mm-hm. 15 MR. RILEY: Um, we also have -- you said 16 residency case is like a box. I mean, in this case 17 we have, I believe, four file boxes filled with 18 cancelled checks signed by Mr. Johnson. These are 19 credit card transactions. 20 So Franchise Tax Board's auditors poured 21 through financial transactions in an attempt to 22 recreate the -- the spending habits and the location 23 of Mr. Johnson throughout the audit. 24 MR. RUNNER: So things they identified in 25 terms of credit card use when indeed he was across 26 the country -- 27 MR. RILEY: There can occasionally be a 28 mistake. We've had cases here before where we talk 44 1 about credit cards, and when does a credit card -- 2 when does the -- a charge post. 3 You know, sometimes a credit card company 4 will list the, you know, the date upon which they 5 received the transaction. Sometimes it's listed on 6 the date in which the transaction actually occurred, 7 and some credit card companies are nice enough to put 8 both of them on there. 9 So the fact that there is an -- you know, 10 that Mr. Dakessian has found an error, you know, 11 certainly that is a, you know -- we are all human. 12 MR. RUNNER: Mm-hm. My only concern is to 13 what extent we try to do to find those kind of issues 14 given the nature of his work. 15 MR. RILEY: Well, I think -- I think that, 16 you know, due to the length of this, you know -- the 17 length the Franchise Tax Board went to in this audit, 18 the number of financial transactions, the number of 19 other documents that -- excuse me -- that we've got 20 in this case, you know, this is a very thorough 21 audit. 22 MR. RUNNER: Mm-hm. 23 MR. RILEY: And so -- excuse me -- again, I 24 would say that, you know, we'll stand by Franchise 25 Tax Board's audit of the -- 26 MR. RUNNER: Yeah. I don't doubt it's a 27 thorough audit. My concern is that they were kind 28 of -- assumptions and blinders were looked at when it 45 1 came to the issue of the information. I think it is 2 thorough, but I just don't know if it started with a 3 preconceived idea, and then that's when the 4 thoroughness of what was put into the effort. 5 Let me just ask one question to the taxpayer 6 to the issue -- well, let me go back one more thing 7 before I go back to them. 8 The issue in regards to -- because, again, 9 we have this issue of balance, right? How do you 10 demonstrate, you know, where a person is? You know, 11 driver's license is sometimes one of those, voter 12 registration is sometimes one of those, those kind of 13 issues, correct? 14 Um, let me -- and then bank statements and 15 those kind of issues. My tendency is to think in 16 these days banking is very different than it has been 17 in the past. I mean, at this time where you bank 18 doesn't make a lot of difference because you can 19 bank, get money out, you can do all kinds of things. 20 And sometimes moving a bank account is really 21 difficult in terms of just trying to move your stuff 22 to a different bank. So that's not quite as 23 challenging. 24 And then of course there's the issue of 25 business. Certainly people can have lots of business 26 investments in the state of California and not 27 have -- not be a resident. So you can have all kinds 28 of businesses invested. And quite frankly, probably 46 1 someone who came from California is knowledgeable 2 about how to make an investment in the state. You 3 know, because you're knowledge -- you have 4 knowledge -- business knowledge. So it seems to me 5 that, in itself, is a bit of a challenge in regards 6 to that issue. 7 But let me go to one issue that came up that 8 I'm interested in, and that is about children's 9 school. 10 Tell me -- tell me about where kids went to 11 school. 12 MR. JOHNSON: Um, my kids -- gosh, I'm 13 trying to think. They were young, so they didn't go 14 to -- I mean, they went to school in New York, but 15 that was like, I don't know, preschool or something 16 like that. 17 MR. RUNNER: Mm-hm. 18 MR. JOHNSON: They went to school in Tampa, 19 Florida. When they would go -- they don't call it 20 school, they call it summer camp. If they were to 21 come -- my ex-wife is from California. 22 MR. RUNNER: Mm-hm. 23 MR. JOHNSON: If they would come home to 24 visit -- 25 MR. RUNNER: Yeah. And, actually, I don't 26 really mean the time after you separated and 27 divorced. 28 MR. JOHNSON: No, no. I mean -- 47 1 MR. RUNNER: I'm talking about the time 2 prior to that. Because at that point, I would assume 3 children went to school where their mother was. 4 MR. JOHNSON: Yes. But I was gonna say, if 5 they came home for, like, the summer or whatever, 6 they would go to summer school. They would call it 7 camp, which is -- I guess they would call it school 8 when they were young. So they would go to school in 9 Los Angeles, they would go to school in Northern 10 California where she's from, and they would go to 11 school in Tampa or even Dallas, Texas at the time. 12 They were old enough in those parts to go to camp 13 schools. 14 MR. DAKESSIAN: Mr. Runner, just to try to 15 illuminate on that point. Maia, Mr. Johnson's 16 daughter, was born in 1995 and was ready to enter 17 kindergarten as early as 2001. Keyshawn Jr. was born 18 in June of '98 and was ready to enter kindergarten in 19 2003. So age-wise that was around the time -- that 20 was around the time that they were separating. 21 MR. RUNNER: When was the separation? 22 MR. JOHNSON: Uh, well -- I'm laughing 23 because -- 24 MR. RUNNER: I'm sorry. I've got it here. 25 MS. HARKEY: 2002. 26 MR. JOHNSON: Yeah, the official was like 27 2002, but, you know, you go back and forth -- 28 MR. RUNNER: Right. 48 1 MR. JOHNSON: -- before it all kind of falls 2 apart. So I would say officially it was like 2002. 3 MS. HARKEY: I -- I -- 4 MR. RUNNER: Okay. That's my -- I'm through 5 with that. 6 MR. DAKESSIAN: May we respond to some of 7 the other points? 8 MR. RUNNER: Sure. Go ahead. Go ahead. 9 MR. RILEY: If I could just jump in -- 10 MR. RUNNER: Let him respond, and I'll come 11 back to that. 12 Go ahead. 13 MR. DAKESSIAN: So the NFL season is a 14 matter of public record. The FTB should not and 15 could not act surprised that, you know, we have games 16 on certain days. I mean, the one thing I will come 17 back to, and if you look at Exhibit 6, and talk about 18 the quality of this audit -- and I don't mean to 19 impugn any particular individual. Things happen. We 20 have a lot of errors we can go through. We do not 21 have the time today to go through them. I can list 22 them one by one. 23 But look at 2002, the Exhibit 6, you go to 24 the last page of -- the third page of Exhibit 6. 25 Look at the month of September. 26 MR. RUNNER: Mm-hm. 27 MR. DAKESSIAN: Look at the month of 28 September. This is the audit. They've got one day. 49 1 This is smack in the middle of the regular season. 2 Did someone not check the NFL calendar? And this is 3 how we're doing our day count. It's indefensible. 4 MR. RUNNER: Okay. 5 MR. DAKESSIAN: It's absolutely 6 indefensible. 7 And in terms of the rest of the NFL season, 8 again, you have someone here who is before you 9 talking to you credibly as a former professional 10 athlete as to what the season is. And I respect 11 Mr. Riley, and I know he read the contract. But you 12 have somebody here who's lived it -- 13 MR. RUNNER: Mm-hm. 14 MR. DAKESSIAN: -- telling you what 15 happened. 16 And can you explain to us the off season 17 training and mandatory volunteering and all that 18 sorts of stuff? 19 MR. JOHNSON: Shall I stand back up? 20 So as you can see earlier I heard the 21 gentleman from the FTB say mini camp was in July. 22 That's not factually true. Mini camp is in March. 23 So you start the mini camp mid- to- late March. 24 Every team -- you know, it's a few days here or 25 there. But for the most part, you're here in March, 26 you're lifting weights, you're running, you're doing 27 all the things to get yourself ready for the season. 28 April, you're doing it. They have to take 50 1 you off for about a week here because they have to 2 get ready for the draft to draft the new players 3 coming in. 4 Then again in May, you're right back at 5 OTAs, and you're in a mini camp. Depending on if you 6 have a new coach or not, depending on how many -- 7 depends on how many mini camps you get. We, for 8 instance, had a new coach in Tampa Bay, John Gruven. 9 We had three mini camps in this period of time from 10 April, May and June -- 11 MR. RUNNER: Can I just ask a quick question 12 about that? So you've got a new coach. He says, 13 "Hey, I want you at mini camp in May." 14 MR. JOHNSON: Yes. 15 MR. RUNNER: And you would say, "Oh, but my 16 contract says -- 17 MR. JOHNSON: No. 18 MR. RUNNER: Okay. 19 MR. JOHNSON: No, no, no. Because you know 20 what they do to you, they look at you and they frown. 21 They look you up and down, and you know what that 22 means. It means you better be at camp or we got 23 somebody else to replace you. 24 So you come into May here, June, now you 25 have vacation, move around, do whatever you feel you 26 need to do. 27 Typically training camps start, you're on a 28 24-hour lockdown, seven days a week in this time 51 1 period. You're not going anywhere except traveling 2 with the team. One year we travelled to Japan. And 3 that's pretty much it. There are no off days in 4 these months here to do any type of traveling. 5 Now you obviously start the season. 6 Somewhere in here you may have a biweek. If you're 7 lucky you get two days off, because you'll play on 8 Sunday, they'll bring you in on Monday, you may get 9 Tuesday, Wednesday, off, maybe, depending on who you 10 have as a coach. Then you come back to practice 11 on -- call it, let's say Thursday, Friday. And 12 you're out late on Friday, so you can't make travel 13 plans to go anywhere. 14 So they want to keep you -- keep you kind of 15 conformed. They don't want you going all over the 16 place during the season. And that's kind of -- it 17 just keeps going that way. 18 MR. RUNNER: Okay. Thank you. 19 Let me follow up with regards to a couple 20 questions. First you want to respond to the school 21 issue, which is good. Thank you. 22 MR. RILEY: So Maia and Keyshawn Jr. 23 attended in 2001 and 2002 the Corrine A. Seeds school 24 on the UCLA campus. I believe that Maia was in 25 the -- she was in the gifted program in -- at that 26 school, and I think Keyshawn Jr. was in the preschool 27 equivalent. Um -- 28 MR. DAKESSIAN: Can we respond? 52 1 Sorry. Go ahead. 2 Can we respond to that point? 3 MR. RUNNER: Well, let me -- I think -- I 4 think -- I -- I think not for me right now. Maybe 5 somebody else. 6 Let me go back to this issue of the 7 discussion in regards to the audit. And we'll just 8 point it out in regards to the September 2002 season 9 and the one date. How do you guys look at that? 10 MR. RILEY: Well, the way that the audit 11 schedule here looks, it's that those were unknown 12 days. Perhaps there were not a sufficient number of 13 financial transactions that the -- that the auditor 14 was able to obtain at that time to -- 15 MR. RUNNER: Unknown dates like you didn't 16 know -- they didn't know the schedule for the 17 football? 18 MR. RILEY: Um, again, this -- well, it 19 appears they haven't included those. So I'm not 20 going to dispute that those dates are not on these 21 November 2000 -- 22 MR. RUNNER: Okay. Let me just -- in 23 closing, and I'll be done. I have a nephew who is a 24 major league baseball player, and so I get a chance 25 to at least see how his schedule is. And I've got to 26 tell you, as a family, I'm offended by your referring 27 to this issue as seasonal. He's full time. 28 When they call him from back where he plays, 53 1 his -- his -- his town, he has to get on an airplane 2 and get back there because they want him. He's got 3 to go visit a hospital, he's got to go do this, he's 4 got to go do that. 5 So, you know, I got to let you know, I'm 6 just -- I'm offended at how it is that you would 7 treat a taxpayer. Again, it's not necessary. Just 8 make your case. But -- but I think people can still 9 be respected. 10 Thank you. 11 MS. STOWERS: Madam Chair. 12 MS. HARKEY: Yes -- 13 MS. STOWERS: I first wanted to go to -- 14 MS. HARKEY: -- Ms. Stowers. 15 MS. STOWERS: -- to, um, address the school 16 issue as far as -- I think, um, the Franchise Tax 17 Board indicated in 2001 the children went to school 18 in Southern California? 19 MR. DAKESSIAN: Keyshawn, can you address 20 that? 21 MR. JOHNSON: They went to -- it's not 22 school -- people call it school, but it's like camp. 23 Artsy -- it's an art school. So they're not there 24 full time. They're there when they were visiting. 25 You have to pay to get your spot. It's one of those 26 special kind of, you know, schools where a lot of 27 celebrities' kids go. And they do activities on 28 weekends, summertime, when they're in town, things of 54 1 that nature. They were not at the school full 2 time. 3 MS. STOWERS: Was this during the summer 4 months, or -- do you know the time of the year? 5 MR. JOHNSON: Um, I would say it was 6 probably during the summer months. 7 MS. STOWERS: And it was a private school 8 that you paid? 9 MR. JOHNSON: It is -- well, it's a public 10 school, but it's private. It's -- it's a public 11 school, but it's, like -- I don't know what you call 12 it. It's like private. 13 MS. STOWERS: Did you have to pay a tuition? 14 MR. JOHNSON: Yeah, you had to pay a tuition 15 to get them in. 16 MS. STOWERS: Okay. 17 I believe to the appellant that you 18 indicated that your client registered to vote and 19 voted in Florida. 20 MR. DAKESSIAN: Correct. 21 MS. STOWERS: What was the timeframe again? 22 MR. DAKESSIAN: That was on the timeline, 23 that's the year 2000. 2000 presidential election in 24 Florida. 25 MS. STOWERS: And my notes also indicated 26 that he was heavily involved in Florida charities 27 during this time period. That he was -- 28 MR. DAKESSIAN: I believe so. I can let him 55 1 speak to that. 2 MR. JOHNSON: Yes. 3 MS. STOWERS: To the Franchise Tax Board, do 4 you dispute registering and voting in Florida and 5 being involved in Florida charities? 6 MR. RILEY: With respect to the voting, no. 7 We -- that was part of our presentation that we -- 8 MS. STOWERS: That was your presentation. 9 Okay. 10 MR. RILEY: -- that we stated that he did 11 vote. But I think with respect to the voting, you 12 know, voter registration, that's a -- you can 13 register to vote on -- on election -- 14 MS. STOWERS: I understand that. But 15 generally when we see these residency cases, they 16 register, but we rarely see them actually voting. 17 And this is different here. 18 MR. RILEY: Mr. Johnson was also in Florida 19 at the time definitely working for, you know -- 20 during -- during November of that month -- I'm sorry, 21 November of that year working for the Tampa Bay 22 Buccaneers. So it would certainly make sense that 23 on -- that he would vote in -- vote in Florida at 24 that time. 25 MS. STOWERS: If that was his residence. If 26 his residence was California, he could have done an 27 absentee vote, right? 28 MR. RILEY: He probably could have. He also 56 1 still -- he -- so in 1997 Mr. Johnson received a 2 California driver's license that did not expire until 3 2002. Whether or not Florida required him to 4 surrender that driver's license, when he received his 5 Florida driver's license in 2000, I do not know. 6 MS. STOWERS: Okay. But in '97 and '98 and 7 '99 he filed as a California resident return? 8 MR. RILEY: With the exception of 1999. 9 He -- he -- in 1999 he did not file a California 10 return. 11 MS. STOWERS: So, Mr. Johnson, when you 12 were -- when you were in Florida did you do a lot of 13 driving? Did you have a Florida driver's license? 14 Did Florida require you to turn in your California 15 driver's license? 16 MR. JOHNSON: I had a Florida driver's 17 license. They did -- if I can remember, they did 18 require me to turn it in. And they put like a 19 little -- a hole puncher. They took it and put a 20 hole puncher in it. 21 MS. STOWERS: Did they keep it? 22 MR. JOHNSON: Yeah. Yeah. No, they gave it 23 -- they gave it back to me. 24 MS. STOWERS: They gave it back to you -- 25 the hole puncher. 26 MR. JOHNSON: Yeah. I couldn't do anything 27 with it, because it had a little circle in it. 28 MS. STOWERS: Okay. A little circle in it 57 1 so it's invalid. 2 MR. DAKESSIAN: I think you had a number of 3 cars there as well, right, in Florida? 4 MR. JOHNSON: Yeah, a number of cars there. 5 But I also -- I also had a New York driver's license 6 too when I was in New York. 7 MS. STOWERS: Okay. Let's talk about New 8 York and -- and Las Vegas 1996. 9 MR. JOHNSON: Mm-hm. 10 MS. STOWERS: Or -- maybe back up. Maybe 11 just talk about the house. You talked about you -- 12 you bought that Tarzana house for your mom -- 13 MR. JOHNSON: Yes, ma'am. 14 MS. STOWERS: -- like so many athletes do. 15 MR. JOHNSON: Yes, ma'am. 16 MS. STOWERS: Where -- where I'm struggling 17 here is that my notes are indicating that you 18 indicated in your divorce decree that you were living 19 at that house. 20 Do you want to speak to that? 21 MR. JOHNSON: Well, I think -- if -- if I 22 say I was living there -- I mean, I wouldn't say 23 living. I would say visiting. But I probably said 24 living. But that's more visiting for me. That's 25 just how I talk. But I was not living there. Not at 26 all. 27 MR. SISLYAN: And just -- was this on the 28 advice of your advisors at the time when you signed 58 1 the prenuptial agreement? This is in the 2 agreement. 3 MR. JOHNSON: No. prenuptial agreement, to 4 be honest with you, I didn't read it. I signed it 5 and was done with it because it's a prenuptial 6 agreement. I'm going to trust my advisors, somebody 7 that I hired to do the right thing in terms of, you 8 know, putting a prenup together. I'm -- I don't 9 know -- the first time I've ever seen a prenup. It 10 was this thick. I'm not -- you know, I'm just 11 like -- it's protecting me from what I was told. 12 You're gonna be protected. Nobody can get your 13 money. 14 MS. STOWERS: You should probably read your 15 contracts. 16 MR. JOHNSON: No, I -- no, I -- 17 MS. STOWERS: Let's -- let's talk about the 18 1996. 19 MS. HARKEY: I read through it. It's a 20 solid -- you got advised well on that. 21 MS. STOWERS: Let's talk about this 1996 22 where you're still in college and you're renting a 23 room in Las Vegas according to the notes and 24 according to the briefing. 25 Mr. Dakessian, can you talk? 26 MR. DAKESSIAN: Yes. So you remember 27 there's the issue of the lease in Las Vegas. They 28 tried to have you be domiciled in Nevada, but that 59 1 didn't work out for a couple of reasons, right? 2 One, whoever did that should have known that 3 you were not gonna have the time to actually spend in 4 Nevada. 5 MR. JOHNSON: Well, what happened in terms 6 of the Nevada situation is originally I was going to 7 live in Vegas. And then once I got drafted by 8 New York, it was like, you know what, I'm not -- I 9 don't want to live -- this is not where I want to 10 live at. I want to live in New York. 11 I mean, like, I don't know if anybody is 12 from Vegas here, but that's just not my deal. I'm, 13 like, nah, this is hot. I didn't know any better. 14 It's the first time I had ever really been in Vegas. 15 You know, I guess I went when I was a kid. But as an 16 adult, I finally had an opportunity to kind of see 17 Vegas. But when you go from Vegas to New York, I 18 mean any reasonable person would probably pick New 19 York to live in. 20 MS. STOWERS: Okay. Thank you. 21 Franchise Tax Board, do you want to make any 22 comments before I -- 23 MR. RILEY: I mean, it sounds like that's a 24 concession that the taxpayer was not a Nevada 25 resident for 1996. 26 MS. HARKEY: And just for clarification, I 27 thought that '96 was conceded. 28 MR. DAKESSIAN: No, '96, we -- we conceded 60 1 the issue of domicile. So one important point is 2 that even if FTB is right, and Mr. Johnson was -- 3 which we do not accept -- he was domiciled in 4 California this entire time, he's not a resident of 5 the state if he left indefinitely. Which he did 6 during his 11-year NFL career. We happen to believe 7 he was also domiciled outside the state. 8 So our concession was strictly to Nevada not 9 being his base of operations in 1996, not whether he 10 was a California resident or not a California 11 resident. Our view is that when he signed the 12 contract, he became a -- he ceased to be a California 13 resident and became a part-year California resident, 14 part-year New York resident. 15 MS. STOWERS: Did he return back to 16 California any time in 1996? My understanding is 17 that he did lease an apartment for the then 18 girlfriend. 19 That you leased an apartment for the 20 girlfriend? 21 MR. JOHNSON: Yeah, she was graduating 22 college with my newborn. 23 MS. STOWERS: With your newborn. So you had 24 your girlfriend, your future wife, and your child in 25 California? 26 MR. JOHNSON: But I had to be in New York 27 because of the stuff behind me. So she had to have 28 somewhere to stay. 61 1 MS. STOWERS: Exactly. Did you -- did you 2 visit them? Did you come to California? 3 MR. JOHNSON: I would visit them when I had 4 an opportunity to. She was too little to travel. 5 Stuff like that. So they didn't -- I mean, I visited 6 them, but it wasn't -- I couldn't visit. We had just 7 gotten a new coach. And, I mean -- I don't mean to 8 talk football with you, but if you know 9 Bill Parcells, he's not -- yeah, he's not having it 10 in terms of missing and stuff like that. He's just 11 not going for it. 12 MS. STOWERS: Did they join you in 1996 in 13 New York? 14 MR. JOHNSON: They joined me in, I want to 15 say, '97 when she graduated -- '96 going -- '96, 16 '97 -- she joined me, like, summer of '97. Yeah, 17 like August of '97. 18 MS. STOWERS: Okay. Thank you. 19 MR. SISLYAN: Can I please add something 20 regarding '96? 21 So he -- during this process that Franchise 22 Tax Board had mentioned a number of cases. One case 23 they haven't mentioned, and this is a published BOE 24 decision, is the Crozier case. This is regarding a 25 taxpayer who was domiciled in California, but not 26 considered a California resident during their 27 temporary absence from California. 28 And I'll just recite the facts quickly here. 62 1 And the key question there was, did the taxpayer 2 leave for an indefinite period of time. And the 3 answer was yes. And the facts are a lot stronger. 4 Just to go through the Crozier facts. So 5 they left temporarily and were only out of the state 6 for 16 months. They expected to return to 7 California. They expected this assignment to last 8 for at least two years, but were forced to return 9 much earlier, only in 16 months. 10 They retained their California driver's 11 license, registered to vote in California, lived 12 in -- their company provided housing when they worked 13 in Japan during that 16-month period. Continued to 14 own their California residence and claim the 15 California homeowners exemption, and took vacations 16 to California during this time. 17 And this Board decided that these taxpayers 18 were not California residents during their absence. 19 Here, Mr. Johnson left California to New 20 York indefinitely. He signed a six-year contract. 21 He was committed to New York. He had no expectations 22 to return back to California. So he had left 23 indefinitely, got a Florida driver's license, 24 registered to vote in Florida. This is, you know, 25 later down the line. 26 He owned substantial homes in New York, 27 Florida, Texas. This is in contrast to the taxpayers 28 in the Crozier's case living in company-provided 63 1 housing, which is a temporary situation. Yet, this 2 Board still found them to be not California 3 residents. 4 Further, never owned a California residence 5 during the tax years, never claimed the California 6 exemption. And, in fact, paid the Florida resident 7 tax. And the only fact that's not stronger is he 8 also took some vacations to California like they did 9 in Crozier, which was okay. So just wanted to point 10 that out for '96. 11 MS. STOWERS: Thank you. 12 MS. HARKEY: Thank you. 13 Member Horton. 14 MR. HORTON: Thank you, Madam Chair. 15 Earlier you cited the distinguishable facts 16 between Morgan, Childs, Ochangco and now the Crozier 17 case. Which is kind of interesting. Can you provide 18 us with the facts in those particular cases as to 19 what the salary was, what the overall conditions 20 were? 21 And the reason I'm asking this question is 22 because these cases date back to 1964. The entire 23 NFL process has changed. At the time they were 24 paying players $600,000 a year, and now they're 25 getting multiple million dollars a year. So they, 26 quite frankly, many of the baseball players and 27 football players couldn't afford to own a home in 28 every state that they played in. 64 1 So -- but I don't want to -- what do you 2 find that's distinguishable about those cases and 3 this case, specifically as to the issue of domicile? 4 MR. SISLYAN: So with respect to the actual 5 compensation, I don't even know if that's in the 6 record. We can go through the amount that was issued 7 in those cases if that's helpful. However, I don't 8 know if we have the amount of compensation. So I 9 don't know if that helps your question. We can go 10 through the differences. 11 And to your point regarding owning multiple 12 homes, as we discussed along the way, Mr. Johnson, 13 during the tax years at issue, he had a number of 14 investments in California, but never a home here. 15 His homes were always outside California, and they 16 were substantial homes. 17 MR. HORTON: To the Department, you referred 18 to properties in California as homes. The appellant 19 referred to them as investments. What are the facts 20 that the Department has to establish them as a home? 21 MR. RILEY: I think the distinction that the 22 taxpayers -- that appellant's counsel is making here 23 is that the homes that appellant owned were actually 24 owned by his trust. And so this is how they are 25 characterizing them. Well, Mr. Johnson doesn't own 26 any homes in California. 27 These, you know, as we read out the -- in 28 the prenuptial agreement with respect to the Tarzana 65 1 home, Shikiri and Keyshawn are presently residing and 2 intend to for the immediate future continue to reside 3 together in the home located in Tarzana, 4 California. 5 MR. HORTON: And the Tarzana home was the -- 6 MR. RILEY: That was the home -- the $1.2 7 million home that he purchased -- 8 MR. HORTON: I understand. The appellant 9 argues that the Tarzana home was purchased as a 10 condition of the divorce. He then implied -- 11 MS. HARKEY: No. 12 MR. DAKESSIAN: The Tarzana home was for his 13 mom. 14 MS. HARKEY: Tarzana was mom. 15 MR. HORTON: His mom. Apologies. 16 MR. RILEY: But then the taxpayers, during 17 the early years of their marriage, according to their 18 prenuptial agreement, also resided there. 19 Then if we go to -- if we talk about the 20 Calabasas home, where, again, it's that 8,434 square 21 foot home that Mr. Johnson purchased and then 22 transferred into his trust and added the 2,000 square 23 foot gym. 24 MR. HORTON: How long did he live there? 25 MR. RILEY: What was that? 26 MR. HORTON: How long did he live there? 27 MR. RILEY: He -- he purchased the house in 28 May of 1999 and sold it in August of 2001. 66 1 MR. HORTON: I mean, how long did he live 2 there? 3 MR. RILEY: Well, we -- based on newspaper 4 articles contemporaneous to the time, we believe that 5 the taxpayer lived there in the off season. 6 MR. DAKESSIAN: We object -- we object to 7 the citation of these newspaper articles. That's not 8 reliable. 9 MR. RILEY: These are contemporaneous -- 10 MR. DAKESSIAN: It doesn't matter. There's 11 no identification for them. But we have responses on 12 this specific property in question. 13 MR. HORTON: I'll come back to you. 14 The Westwood property -- apartment. 15 MR. RILEY: The Westwood apartment was the 16 property that Mr. Johnson rented for Shikiri and the 17 baby in June of 1996. 18 MR. HORTON: Whatever else do you have on 19 the Rensfield (sic) home that he actually lived 20 there? 21 MR. RILEY: The Ravenfield home? 22 MR. HORTON: Ravensfield. My apologies. 23 MR. RILEY: We -- we believe that the -- 24 that the house was purchased. They were renting the 25 Beverly Hills home, the 3,500 square foot rental, we 26 believe, according to the audit, while they built the 27 Ravensfield home. Which was the 9,600 square foot -- 28 the 9,600 square foot home. They purchased the 67 1 Ravensfield home in April of 2001. And it looks like 2 before that house was finished, that the taxpayer 3 filed for divorce. And so perhaps their family plans 4 changed. 5 MR. HORTON: Let's not say perhaps. What 6 actually happened? 7 MR. RILEY: Well, the taxpayer filed for 8 divorce. The couple separated in September of 2002, 9 Mr. Johnson filed for divorce in -- 10 MR. HORTON: They never lived there? Had 11 they ever lived there? 12 MR. RILEY: I do not -- Mr. Johnson may have 13 lived there. But I do not believe that the -- 14 MR. HORTON: No facts that they actually 15 lived -- did he ultimately sell the house? 16 MR. RILEY: He did sell the house in -- 17 MR. HORTON: When did he sell it? 18 MR. RILEY: -- April of 2004 shortly about 19 the same time he purchased the Calabasas land upon 20 which he built that 11,000 square foot home. 21 MR. HORTON: The restaurant and the clothing 22 store, any evidence that the taxpayer operated the 23 store, or did they have somebody else operating it? 24 MR. RILEY: Well, Mr. Johnson did claim on 25 his 2000 taxes that -- he claimed a nonpassive loss. 26 And I believe they lost something around -- bear with 27 me for a moment -- $775,000 on that property, 28 which -- 68 1 MR. HORTON: To the restaurant and the 2 clothing store, any evidence that he actually managed 3 and operated the store? 4 MR. RILEY: Just the -- just the nonpassive 5 loss with respect to Rain restaurant. With respect 6 to the Shikiri Collection, that appears to have been 7 appellant wife's business. 8 MR. HORTON: On the Ravenfield's home, how 9 did he record -- did he record a gain? 10 MR. RILEY: I'm sorry? 11 MR. HORTON: On the Ravenfield's home, did 12 he record a gain? 13 MR. RILEY: I believe he sold it for 14 $4 million. So I think he purchased it for 15 3.3 million and sold it for about 4. 16 MS. STOWERS: Did the property qualify for 17 any gain exclusion? 18 MR. RILEY: The -- which -- the Ravenfield's 19 home? 20 MS. STOWERS: Yes. 21 MR. RILEY: I am unsure. 22 MS. STOWERS: To the appellant, did the 23 property qualify for any residential gain exclusion 24 on your residing house for two or more years? 25 MR. DAKESSIAN: I don't believe so, no. 26 MS. STOWERS: Did you claim an exclusion? 27 MR. DAKESSIAN: I beg your pardon? 28 MS. STOWERS: Did they claim an exclusion on 69 1 the property? 2 MR. DAKESSIAN: I don't believe so, no. 3 MR. RILEY: Are you talking about -- excuse 4 me -- are you talking about a California homeowners 5 exemption? 6 MS. STOWERS: No, I'm talking about 7 excluding 500,000 to 250,000 of the IRC section under 8 sale. 9 MR. RILEY: Okay. Thank you. 10 MR. HORTON: Did the Department note any 11 exclusion? 12 MR. RILEY: I'm sorry? 13 MR. HORTON: Did the Department note any 14 exclusion on the sale? 15 MR. RILEY: I don't have that in front of 16 me. I apologize. 17 MR. HORTON: To the appellant, on the 18 condition of your contract, did you -- was there ever 19 any intent for you to play for a California team? 20 MR. JOHNSON: No. 21 MR. HORTON: Did you ever negotiate with a 22 California team? 23 MR. JOHNSON: No. 24 MR. HORTON: How long is your career? 25 MR. JOHNSON: Eleven. 26 MR. HORTON: Eleven years? 27 How long was your contracts? Your first 28 contract was for how long? 70 1 MR. JOHNSON: Six years. 2 MR. HORTON: And where were you? 3 MR. JOHNSON: New York Jets. 4 MR. HORTON: Second contract? 5 MR. JOHNSON: Tampa Bay Bucs was eight 6 years. 7 MR. HORTON: Third contract? 8 MR. JOHNSON: Dallas Cowboys was another 9 eight years. 10 MR. HORTON: Any intent or any thought of 11 playing for a California team? 12 MR. JOHNSON: No. 13 MR. HORTON: So during your entire career 14 none of your business was made here -- none of your 15 income -- there was no intent to play in the state of 16 California? 17 MR. JOHNSON: No. I mean, I was -- 18 MR. HORTON: No negotiations took place? 19 MR. JOHNSON: Never. And I was (inaudible) 20 twice. 21 MR. HORTON: In your contract, any 22 contractual obligations for you to be the face of the 23 team? 24 MR. JOHNSON: Pretty much every time I 25 played on -- 26 MR. HORTON: And what does that mean to be 27 the face of the team? 28 MR. JOHNSON: They use you in marketing 71 1 promotions. 2 MR. HORTON: And what's the purpose of that? 3 MR. JOHNSON: I guess to get the fans -- sell 4 seats, yeah. Get the fans all excited about it. 5 MR. HORTON: Economic perks. 6 MR. JOHNSON: Yes. 7 MR. HORTON: Financial perks. 8 MR. JOHNSON: Yes. 9 MR. HORTON: Did you participate in any 10 nonprofit activities in New York or Tampa such as 11 United Way and so forth? 12 MR. JOHNSON: I did United Way. I also did, 13 um -- I'm trying to think -- 14 MR. DAKESSIAN: Make A Wish. 15 MR. JOHNSON: Make A Wish. 16 MR. DAKESSIAN: A few of them. 17 MR. JOHNSON: I mean, I did a bunch. There 18 was several. But United Way was a big one for me. 19 MR. HORTON: What did you do for United Way? 20 MR. JOHNSON: You know, just get out and 21 raise funds, go around, talk to kids. You know, they 22 would have an annual, like, a dinner deal that I 23 would attend and go to. 24 MR. HORTON: Any conditions in your 25 contracts that exclude you from practicing with your 26 team? 27 MR. JOHNSON: No. 28 MR. HORTON: When you traveled were you 72 1 allowed to stay away from your team? 2 MR. JOHNSON: No. 3 MR. HORTON: Is it a condition or implied 4 condition that when you travel you stay with your 5 team? 6 MR. JOHNSON: Yeah, they -- yes. 7 MR. HORTON: Yes? 8 MR. JOHNSON: Yes, you have to stay with 9 your team. 10 MR. HORTON: The, um -- when you purchased 11 your home for your mom, it's also -- what do you have 12 to substantiate that you purchased a home 13 specifically for your mom? 14 MR. JOHNSON: I mean, me telling you, but 15 also it's in the trust. And -- 16 MR. HORTON: In the trust? 17 MR. SISLYAN: And just to add, it's also in 18 the FTB's briefing that Keyshawn was not living 19 there, it was his mother and other family members. 20 MR. JOHNSON: Mother, brothers and 21 sisters. 22 MR. SISLYAN: And just one more point on 23 that home. I know we talked about it being in the 24 prenup. But first of all, Keyshawn just signed that 25 and trusted his advisors. Secondly, does it really 26 sound realistic that newly married Keyshawn went to 27 live with his mother? No. 28 MR. JOHNSON: With the kids. 73 1 MR. RILEY: Well, it's a 6,500 square foot 2 home. 3 MR. JOHNSON: And I've got six other 4 brothers and sisters too. I'm beyond sleeping on 5 couches. 6 MR. HORTON: Okay. 7 To the Department, the appellant has pointed 8 out errors in the audit. Has the Department had an 9 opportunity to review all the errors provided? 10 MR. RILEY: No, I mean -- 11 MR. HORTON: Or disputed errors. 12 MR. RILEY: I mean, we've just had this this 13 morning to -- you know, we heard it at the 14 presentation. So I've been obviously engaged in 15 this. And so to review each of the alleged errors, 16 I have not gone over them or reviewed what this -- 17 and compared it with the audit files, so no. 18 MR. HORTON: Did the appellant provide 19 those? 20 MR. DAKESSIAN: Did we provide what? 21 MR. HORTON: Did you provide documentation 22 of the errors that you observed in the audit 23 findings? 24 MR. SISLYAN: I believe we did for just a 25 couple of examples, not every single one. And that's 26 in the exhibits. However -- 27 MR. HORTON: Did you indicate when you 28 provided the examples that these were just examples 74 1 and that there were an aggregate total of some sort? 2 MR. SISLYAN: Yes. These are just examples. 3 I don't know if we have an aggregate total, but a lot 4 of these are so obvious. Just based on public 5 record. 6 MR. HORTON: What action did the -- to the 7 Department, what action did the Department take when 8 they were advised of these errors? 9 MR. RILEY: I mean -- go ahead. 10 MR. HOFSDAL: We just got the exhibits today 11 that he's referring to as far as putting us on notice 12 of errors. 13 MR. DAKESSIAN: We've always -- Mr. Horton, 14 we've always maintained that the day count is flawed. 15 But, you know, I don't believe we are required to 16 provide them with a copy of our presentation. 17 So we can go through the specific examples 18 one by one, but they're frankly undeniable. I mean, 19 they shouldn't be controversial. 20 One Florida day in the entire month of 21 September, there's nothing to review there. That is 22 someone not doing their job. 23 MR. SISLYAN: And it's mentioned throughout 24 the briefing that we disagree with these numbers and 25 they're not accurate. 26 MR. HORTON: The Department indicated that 27 the children of the appellant were in school in 28 California. 75 1 MR. RILEY: Correct. The Corrine A. Seeds 2 school on the UCLA campus from 2001 until at least 3 October of 2002. 4 MR. HORTON: What grade were they in? 5 MR. RILEY: I believe that Mr. Johnson's 6 older daughter was in kindergarten, and the -- and 7 Mr. Johnson's son was in preschool type. 8 MR. HORTON: And the appellant, in reference 9 to the children attending school, what say you. 10 MR. DAKESSIAN: We say that they attended 11 school in Tampa in the fall of 2000. And I think 12 Mr. Johnson explained that the school, to which the 13 Franchise Tax Board refers, was an art camp that was 14 held in the summer and tuition was paid in connection 15 with that camp. 16 MR. SISLYAN: And just to add to that, just 17 because the children were enrolled, first of all, 18 doesn't mean they actually attended. 19 Secondly, just because -- even if they did 20 attend, it doesn't mean Mr. Johnson was in 21 California. And the children were with Shikiri. And 22 they weren't always together. They were on and off, 23 you know, given the separation. I know there was an 24 official separation date, but that doesn't mean 25 Mr. Johnson was with the children. The children were 26 with Shikiri. 27 MR. HORTON: In your own words, Mr. Johnson, 28 what was the period of time in which you and your 76 1 wife were going through some form of separation? 2 MR. JOHNSON: Um, two -- started probably 3 like in late 2000, but off and on all the way up 4 until it was finalized. 5 MR. HORTON: And where would your wife stay 6 during that time? 7 MR. JOHNSON: Well, stayed in Tampa with me. 8 We slept in separate rooms. Kind of embarrassing, 9 but -- and then she would go home, go see her mom, go 10 to LA, come back. 11 MR. HORTON: Her family is in Los Angeles? 12 MR. JOHNSON: They're in Northern 13 California, Berkeley. 14 MR. HORTON: That's all for now, Madam 15 Chair. Thank you. 16 MS. HARKEY: Thank you. 17 Do you want to? 18 Okay. Member Ma. 19 MS. MA: So for Florida purposes, when you 20 registered to vote in Florida -- 21 MR. JOHNSON: Mm-hm. Yes, ma'am. 22 MS. MA: And you registered to vote in 23 New York -- 24 MR. JOHNSON: I believe I did. 25 MS. MA: Okay. 26 MR. JOHNSON: I mean, that's so long ago. 27 But I'm almost certain I did. 28 MS. MA: Yeah. So Florida we looked up. If 77 1 you register to vote, you have to be a citizen. You 2 have to be over 18, and you have to be a resident of 3 Florida. And you sign under penalty of perjury 4 because that's what the law says. 5 And then, you know, with the restaurant and 6 the clothing store, I mean, it's -- if he is -- what 7 he or his wife were invested in that business, it 8 would be active income versus passive income. And I 9 don't know if someone mentioned that. I didn't have 10 a problem with that. 11 I do have a question, though, for you. For 12 the taxpayer, I see -- I have copies of your '96, 13 2000, 2001, 2002, 2003, 2004 tax returns. Did you 14 use the same tax preparers? 15 MR. JOHNSON: Um, I believe so, yes. 16 MS. MA: It says the same address. I was 17 just -- 18 MR. JOHNSON: Yeah, I've -- 19 MS. MA: -- wondering if you've changed your 20 tax preparers over those years, over those audit 21 years. 22 MR. JOHNSON: I'm sure I used the same 23 people. 24 MS. MA: Okay. Then I just have an 25 interesting question. I'm going through your W-2s 26 for those years that you were at Tampa. You were at 27 Tampa one, two, three, four years, but the amounts 28 are a little different. Like did they not pay you 78 1 the same amount every year? 2 MR. JOHNSON: No, the contract -- my 3 contracts are typically -- it's all about 4 negotiation. So they typically are frontloaded. And 5 then they kind of, you know -- a lot of times people 6 see increases, but it just depends on how you 7 negotiate the contract. If you want it frontloaded, 8 if you want it fully guaranteed, you get if fully 9 guaranteed. Sometimes -- I mean, it's just -- it's 10 playing with numbers basically at the end of the day. 11 MS. MA: Okay. 12 MR. JOHNSON: That's why those amounts kind 13 of do this. 14 MS. MA: Okay. That's my only question. 15 MS. HARKEY: Okay. Thank you. 16 I have just a few. 17 We did an in-depth data dive, so to speak, 18 on all of this. And I've got all your bragg factors 19 for every year. And I have your residency for 20 financial, and I have all your properties where they 21 went in and out. Because we really wanted to hone in 22 on the issues here. 23 And, um, even if we look on -- based on the 24 financial transactions in California, from the year 25 2000 to 2004, the FTB, in essence, concedes that 26 there was a lot more out of state. We have time in 27 California for 2000, 115; and then 250 in New York or 28 out of state. 79 1 MR. RILEY: I don't believe we concede that 2 there are more transactions out of California between 3 California and Florida in 2000 to 2004. 4 MS. HARKEY: Well, these are based on 5 financial transactions in California -- this is what 6 my staff derived -- and then as reported on the 7 taxpayer tax returns. 8 MR. RILEY: I believe we -- in our 9 presentation we stated that it was a three-to-one in 10 favor of California during that period. And if you 11 look at the dollar amount, it was seven-to-one in 12 favor of California during that period. 13 MS. HARKEY: Yeah, that's what you said. 14 But I've got problems with, you know, extracting that 15 from the information. I have 115 days in 2000, I 16 have 99 days in 201, 75 days in 202, and 73 days in 17 203, and 33 days for the first quarter, I guess it 18 is, of 2004. And they were based on financial 19 transactions. I have 250, 266, 290, 291, and 332 20 days. 21 I do have a problem with '96. I just -- you 22 know, I do have a problem with '96. I see a lot 23 going on. I think that, um -- I think the school has 24 kind of been explained. And I don't have a problem 25 with the attorneys, tax advisors and medical 26 professionals being in California. Sometimes we keep 27 the ones that we're comfortable with. 28 Um, the -- there were vehicles in California 80 1 and vehicles in Florida. 2 Now, you did change your address, Mr. -- or 3 Keyshawn, you did change your address or your voter 4 registration to Florida in 2000. You had eight 5 vehicles registered in California and three in 6 Florida. Were those all yours? Did they belong to 7 family? How did you do that? 8 MR. JOHNSON: The majority of my vehicles 9 was used by the family. I -- I would, you know, buy 10 them cars or lease cars, but they had to be in my 11 name so they can drive them. So whenever I would 12 come to town, smart money says, "Why would I rent a 13 car when I have one here at home in my mom's house 14 that I can use?" So that's basically what any of 15 those vehicles would say. 16 In terms of cars in Florida, I had way more 17 than three cars in Florida over a four-year period of 18 time. Not at once, though. 19 MR. SISLYAN: And I think much nicer cars in 20 Florida. 21 MR. JOHNSON: Yeah, much nicer cars in 22 Florida. My mom wasn't driving no Lamborghini. 23 MS. HARKEY: I think you explained the 24 prenup and the address. I did, you know -- I did 25 read through it. It was staged and done 26 appropriately and maybe that was asked. 27 On the houses that you had, let me get into 28 that. So I want to go from 2000 forward. In 2000 -- 81 1 in January of 2004 you purchased -- you entered into 2 a contract to purchase a house in Tampa, Florida -- 3 January 2000, rather -- no, April of 2000. 4 And then it looks like the purchase was 5 completed June 14th of 2001. So for 2000 it appears 6 you were definitely in Florida to me. 7 You did not sell that property until 2004? 8 MR. JOHNSON: Yes. 9 MS. HARKEY: Okay. Um, then -- 10 MR. RILEY: There is, however, a gap, if I 11 may -- 12 MS. HARKEY: Yes. 13 MR. RILEY: -- between the Tampa apartment 14 rental, which ended in April of 2001, and the Tampa 15 home purchase, you know, the ultimate purchase in 16 occupancy of the Tampa home, in August of 2001. 17 There is a four-month gap. 18 MR. SISLYAN: Just to address that gap. In 19 fact, there was no gap. Mr. Johnson contracted for a 20 custom-built home in Tampa. In fact, there was no 21 gap in April of 2000 and during the time when his 22 home was being built, he rented another home, a large 23 house where he lived until that -- his, you know, 24 permanent own residence was completed. 25 MS. HARKEY: Okay. I have here that the home 26 in Calabasas, looks like it was purchased in May of 27 '99 and sold in August of 2001. It was an investment 28 property. 82 1 MR. JOHNSON: Yes. It wasn't -- so I 2 explain it to you. It wasn't purchased finished. It 3 was a foreclosed home that I purchased from a friend 4 of mine who was a builder. We added on a 2000 square 5 foot gym, because we were eventually going to sell it 6 and wound up selling it to Mitch Richmond, who was a 7 basketball player. So that was the market. 8 If anybody knows, like, Calabasas area, it's 9 a market for athletes. And so this was the beginning 10 stages of this boom that has taken off in the 11 Calabasas area. 12 So it was purchased. It was built -- 13 finished being built, and it eventually sold. 14 MS. HARKEY: Okay. The Beverly terrace in 15 Los Angeles, May 8th of 2001 it looks like, and then 16 sold in December of 2004. It says that you purchased 17 and remodeled an 11,206 square foot home. 18 What was that purpose for the Beverly 19 terrace? 20 MR. JOHNSON: That is in conjunction with 21 Esquire magazine. So we built the home in 22 conjunction with Esquire magazine. They came in and 23 outfitted everything, and we wined up selling it 24 again for profit. So an investment. 25 MS. HARKEY: Okay. Thank you. 26 Um, the 2001 to 2002 May to December -- May 27 of 2001, December of 2002 there was a Bayer Bridge 28 Drive Beverly Hills, a rented house. 83 1 MR. JOHNSON: Yes, that was a -- that was a 2 rental home. So Shikiri would come back and forth, 3 rather than spending $800 a night to stay in a 4 Beverly Hills hotel, it made sense if people were to 5 travel to LA to just rent a house. 6 MS. HARKEY: I understand that. Yeah. 7 Okay. 8 Then there was a house in Tampa -- we've 9 heard about that. The April 2000 contract of 10 purchase, and you sold it in 2004. And there were 11 numerous news articles that said your wife left 12 Florida with the kids because of relationship issues. 13 That was in 2001. A lot of articles in the paper. 14 And so I would think that they -- that kind of states 15 that you had lived there previously. 16 So let me see, anything else? Um, the 17 Pleasanton home you explained, Ravensfield Lane, you 18 explained. Um, so I'm pretty good. I just have a 19 1996 question. I guess I'm not solid on '96. 20 And explain to me why '96 you were not 21 here. 22 MR. DAKESSIAN: So our position on 1996 is 23 that when he was in New York, and he signed the 24 contract to play for the Jets, even though he was 25 domiciled in California, at that moment he left the 26 state for other than temporary or transitory 27 purposes. 28 When you've got a six-year deal with a 84 1 professional football team, you know you're not going 2 to be living in California. So under California law, 3 even though he's domiciled, he left the state for 4 other than temporary or transitory purposes when he 5 signed the contract. 6 MR. SISLYAN: And I think you need to keep 7 this in mind with the Crozier Board of Equalization 8 decision where the facts are they left for 16 months. 9 Here, he signed a six-year contract to be in New 10 York. 11 MR. RILEY: If I may, two points. 12 MS. HARKEY: Sure. 13 MR. RILEY: The New York is now a new 14 position that the taxpayer's reps are bringing up 15 today that he was a New York resident rather than a 16 Nevada resident. So these are not things that have 17 been briefed, despite ample opportunities for 18 appellants to do so. 19 And with respect to the Crozier case, um, if 20 you weigh Mr. Johnson's California connections 21 with -- against his Florida connections, we believe 22 his California connections far outweigh the Florida 23 connections. 24 And we can distinguish Crozier, because in 25 Crozier, the family was exiting California, not 26 remaining or continually returning to California as 27 Mr. Johnson. 28 And the Crozier family, when they moved to 85 1 Japan, they severed all the California ties that they 2 had. They didn't maintain all of their -- the homes 3 they purchased, and their -- their businesses. Okay. 4 They severed -- they sold property and they rented 5 out their home. 6 So Mr. Johnson maintained the Tarzana home, 7 which he owned during the end of 1996, '97, when he 8 was a resident, '98, when he was a resident and 9 admitted in the prenuptial agreement that they lived 10 in that home. 11 He purchased the Calabasas home also in 12 1999. And hearsay evidence such as newspaper 13 articles is allowed before your Board. So the fact 14 that a contemporaneous newspaper article places 15 Mr. Johnson in the Calabasas home working out in the 16 off season is definitely evidence that Mr. Johnson 17 was here in California and intended to return to 18 California in the off season. Which is a mark of a 19 California domiciliary, and we believe California 20 resident. 21 MS. HARKEY: Let me just ask one question. 22 I have the years. I want to be sure I'm solid on 23 these. The years that are being disputed. 1996 then 24 2000. 25 MR. RILEY: Correct. 26 MS. HARKEY: Okay. 2001, 2002, 2003, 2004. 27 So what happened in those interim years between '96 28 and 2000 are not at issue. 86 1 MR. DAKESSIAN: Not at issue in this 2 appeal. 3 MS. HARKEY: Thank you. 4 Member Ma. 5 MS. MA: So to the Franchise Tax Board, did 6 the taxpayer file a California resident return for 7 1997 and 1998? 8 MR. RILEY: They did. They filed -- 9 Mr. Johnson filed a single California resident return 10 in 1997, and the taxpayers -- and the appellants 11 filed a joint California resident return for 1998. 12 MS. MA: Okay. 13 So I heard that you got bad advice when you 14 first signed your contract in 1996. It appears that 15 your tax preparers were the same tax preparers living 16 in Texas the whole time from 1996 to 2004. I think 17 1996 should be a California resident. But I think 18 1999 through -- or 2000 to 2004 should be a 19 nonresident as filed. 20 But that's how I see it. That there was a 21 filing error in 1996 based on information that was 22 given to your tax preparers. 23 And I see you reported an address in Las 24 Vegas. You said you weren't in Las Vegas, really you 25 moved to New York. So probably -- but then in '97, 26 '98 your tax preparers filed a California resident 27 return. 28 And so, you know, it kind of -- can't flip 87 1 back and forth I think. Because you were still 2 signed with the Jets, still had the eight-year 3 contract. So that's kind of where I stand with this 4 case. 5 MS. HARKEY: Okay. Yeah. So did I hear a 6 motion to grant for the taxpayer all except 1996? 7 MS. MA: That would be my motion. 8 MS. HARKEY: There was a motion made by 9 Member Ma. I will second that. 10 Is there any objection? 11 I don't -- not hearing any. Such will be 12 the order. Thank you. 13 MR. JOHNSON: I mean -- 14 MR. DAKESSIAN: Thank you. 15 16 17 18 19 20 21 22 23 24 25 26 27 28 88 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Jillian Sumner, Hearing Reporter for 8 the California State Board of Equalization certify 9 that from December 11, 2017 audio, I recorded 10 verbatim, in shorthand, to the best of my ability, 11 the proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 88 14 constitute a complete and accurate transcription of 15 the shorthand writing. 16 17 Dated: February 26, 2018 18 19 20 ____________________________ 21 JILLIAN SUMNER, CSR #13619 22 Hearing Reporter 23 24 25 26 27 28 89