Massachusetts Ruling Upends Norms for Taxing Nonresident Income

A recent Massachusetts appeals court ruling endorsing the revenue department’s broad reach to tax nonresidents’ capital gains is unsettling expectations about how such stock sales are treated across the state.

New Hampshire resident Craig Welch failed to convince the Massachusetts Appeals Court to overturn a $300,000 Massachusetts income tax assessment on 100% of the capital gain he made selling stock in his risk management services company, AcadiaSoft Inc.

Welch lived in Massachusetts from the time he co-founded the company until shortly before the sale, meaning the gain was derived from his business there, the court ruled Thursday.

The decision will ...