Washington Tax Decisions

A business owner protests the real estate excise tax (“REET”) assessment on a controlling interest transfer claiming that, pursuant to RCW 82.45.010(3)(p) and WAC 458-61A-212, the assessment should be reduced only to the extent that the gain was recognized in an Internal Revenue Code § 731 transaction. We deny the petition.

Taxpayer appeals the assessment of deferred sales tax on a contract for demolition and excavation work performed at a manufacturing facility. The demolition and excavation work was for the removal of foundations in the facility after obsolete milling equipment was removed and before new milling equipment was installed. The Department holds that the demolition and excavation contract is to be evaluated independently from the contracts for other activities related to the removal and installation project. The Department further holds that the demolition and excavation work performed does not constitute “installation” of qualifying machinery and equipment and is therefore not subject to a retail sales tax exemption. Taxpayer’s appeal is denied.