Washington Tax Case Risks Chasing Business, Wealthy Out of State

A dispute before the Washington Supreme Court about the scope of the state’s investment income deduction likely has wider-reaching implications than the courts realize, tax practitioners say.

The justices will hear arguments Tuesday in a case over whether 16 investment funds led by Antio LLC are entitled to take the business and occupation tax deduction for “amounts derived from investments.” If so, they are entitled to refunds of more than $400,000.

A state appeals court said they aren’t, citing the state high court’s 1986 ruling in O’Leary v. Department of Revenue for the proposition that deductible “investments” are ...