Investment Funds Stuck With Washington Business Taxes on Revenue

Sixteen investment funds failed to convince a Washington appeals court Tuesday that their income qualified for a business and occupation tax deduction for “amounts derived from investments.”

The Washington Department of Revenue denied the companies their requested refund, totaling over $404,000. The agency cited the state high court’s 1986 ruling in O’Leary v. Department of Revenue, which held that the term “investments” in the deduction was limited to investments incidental to the main purpose of the taxpayer’s business.

The Washington Court of Appeals, Division II, agreed with the department’s interpretation, finding the companies don’t pass the O’Leary test because ...