The taxpayer lives in Los Alamos, New Mexico, and owns houses in Texas, which he manages as rental units. In 1996, the taxpayer registered to vote in Texas, but he has maintained his mailing address and telephone number at his Los Alamos residence. The taxpayer acknowledges that he currently is a New Mexico resident. Using the address of one of his rental homes in Texas, the taxpayer filed a “nonresident” 1999 New Mexico personal income tax return. On Form PIT-B, of his 1999 income the taxpayer allocated to New Mexico only the $1,268 his wife earned from her employment in Los Alamos. The Department adjusted the taxpayer’s 1999 PIT-1 to allocate all the couple’s income to New Mexico, based on the Department’s position that the taxpayers were New Mexico residents during 1999. The Department assessed tax, penalty and interest for tax year 1999. The taxpayer filed a written protest of the assessment, contending that he and his wife were residents of Texas in 1999. The taxpayer further maintains that, even if he was a New Mexico resident in 1999, he is entitled to exclude from tax certain income from non-New Mexico sources. The evidence shows that the taxpayers been New Mexico residents since 1988 and have not taken affirmative action to establish a permanent residence in Texas. The taxpayers should have reported their 1999 income to New Mexico on the basis of New Mexico residency. The taxpayer’s protest was denied, but the Department did allow additional allocations of income to other states and reduced the amounts assessed.