DAKS

The question in this case is whether pension income earned while a taxpayer is a resident of another state but distributed after the taxpayer becomes a resident of California is taxable personal income in California. We hold that it is.

Facts

From 1948 to 1982, Joseph Daks resided in New York, where he was employed by United Merchants and Manufacturers, Inc. or one of its subsidiaries. During his employment, he participated in a noncontributory, qualified defined-benefit pension plan within the meaning of section 401(a) of the Internal Revenue Code. In January 1982, shortly after Daks retired, he elected to receive his pension in the form of “100 monthly payments certain.” Daks received his first pension payment in January 1982, in New York. In May, Daks moved to California, where he continued to receive his monthly pension payments without interruption.

When Daks filed his California income tax returns for 1984 through 1987, he did not report his pension payments as gross income. In 1989 and again in 1990, the Franchise Tax Board notified Daks that the pension payments he received for the years 1984 through 1987 were taxable income, and that additional taxes would be…