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Washington Capital Gains

In March 2023, the Washington Supreme Court ruled that the state’s capital gains tax is a constitutional excise tax, not an income tax, even though it is measured by net long-term capital gains allocable to Washington. Politicians and some press argued that the tax was easy to apply because the starting point was long-term capital gains reported on a taxpayer’s federal income tax return. However, because the statute was designed to mollify certain political constituencies, and to qualify as an excise tax instead of a tax on income, this tax statute is incredibly confusing and promises to open the door to much litigation.

Below, we provide a number of resources to help you navigate the tax and its potential implications.

Related Practices & Industries

Tax

Related People

Callie A. Castillo
Scott M. Edwards
Lewis M. Horowitz
Aaron C. Johnson
Gary M. Kirk
Jamie R. Lanier
Aimee L. Miller

Contact

Lane Powell Tax Team

External Resources

Statute (RCW)

Chapter 82.87 RCW
Pending Legislation: The legislation is currently proposed legislation and has not officially been submitted to the legislature. The proposed agency request legislation can be accessed here.

Rules (WAC)

WAC 458-20-300
WA Department of Revenue (DOR) Information
Proposed Rules:
- WAC 458-20-301

DOR Guidance

Calculation of Credit for Taxes Paid to Another Taxing Jurisdiction
Capital Gains Excise Tax and Section 1256 Contracts
Frequently Asked Questions

Litigation

Trial Court: Quinn v. Dep't of Revenue
Washington Supreme Court: Quinn v. Dep't of Revenue
Petition to the U.S. Supreme Court: Quinn v. Dep't of Revenue

Our Insights

September 5, 2023News
Jamie Lanier Authors Mondaq Article 'Demystifying The Charitable Deduction For The Washington Capital Gains Tax'
In the News
August 30, 2023Publication
Lane Powell Files Petition for Certiorari to SCOTUS Regarding Washington Capital Gains Tax
Tax Legal Update
August 30, 2023Publication
Demystifying the Charitable Deduction for the Washington Capital Gains Tax
Seattle Foundation
August 18, 2023Publication
Does Washington’s Capital Gains Excise Tax Reduce Taxable Gain?
Tax Legal Update
July 13, 2023Publication
Washington Capital Gains Tax: Checklist of Factors Relevant to a Taxpayer’s Domicile
Tax Legal Update
June 16, 2023Publication
Demystifying Washington State’s New Capital Gains Tax
Tax Legal Update
March 24, 2023Publication
Capital Gains Tax Ruled to be an Excise Tax on the Privilege of Selling Assets — But There is a Silver Lining
Tax Legal Update
November 30, 2022Publication
Washington Supreme Court Allows the State to Enforce Capital Gains Tax Pending Review on the Merits
Tax Legal Update

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