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Washington DOR Issues Guidance on B&O Tax Treatment of Collective Investment Vehicles and Investment Income
Interim guidance statement regarding collective investment vehicles and investment income, Wash. Dept. of Rev. (4/16/25). The Washington Department of Revenue (Department) issued state business and occupation (B&O) tax guidance on how it intends to treat collective investment vehicles (CIVs), and it generally concludes that it will treat the investment income of a CIV as not taxable; however, amounts received by a CIV from non-investment sources generally are taxable. The B&O tax guidance also explains that amounts received by investors in a CIV generally are taxable, unless:
A deduction or exemption otherwise applies to such investors, or
The investors are considered to not be engaging in business with respect to the investment activity.
Referencing a 2024 Washington Supreme Court decision involving investment income earned by sixteen investment funds [see Case No. 102223-9, Wash. (10/24/24), and previously issued Multistate Tax Alert for more details on this 2024 decision], which “raised questions as to the taxability of CIVs, and whether CIVs are subject to the service and other B&O tax classification of Washington’s B&O tax,” the Department noted that this 2024 decision did not directly address the B&O tax treatment of CIVs. Please contact us with any questions.
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