A recent Washington Supreme Court decision limiting the state’s business and occupation tax investment income deduction is causing anxiety among investors, who stand to face unexpected tax bills and sizable penalties in its wake.
The court adopted the Washington Department of Revenue’s narrow reading of the deduction for “amounts derived from investments” in its Oct. 24 ruling. Statutory amendments from 2002 didn’t expressly abrogate 1986 court precedent, so deductible “investments” are still those incidental to the taxpayer’s business, not those that are the reason the company is in business, the 7-2 court ruled.
That interpretation opens the door for …
