The benzylic methylene proton is acidic and deprotonation takes place to produce the benzylic ylide (1). This ylide is in equilibrium with a second ylide that is formed by deprotonation of one of the ammonium methyl groups (2). Though the second ylide is present in much smaller amounts, it undergoes a 2,3-sigmatropic rearrangement because it is more reactive than the first one and subsequent aromatization to form the final product (3).[5]
^ abRearrangements of Benzyltrimethylammonium Ion and Related Quaternary Ammonium Ions by Sodium Amide Involving Migration into the Ring Simon W. Kantor, Charles R. Hauser J. Am. Chem. Soc., 1951, 73 (9), pp 4122–4131 doi:10.1021/ja01153a022