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COURT OF APpPALS
MviSlott
1013 JUL -

FIL

AM Q: Q8

IN THE COURT OF APPEALS OF THE STATE OF W.
DIVISION II CASHMERE VALLEY BANK,
No. 42514 9 II - -

1 *

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By

Appellant,
V.

STATE OF WASHINGTON DEPARTMENT

PUBLISHED OPINION

OF REVENUE,

PENOYAR J. --

The Washington State Department of Revenue (Department) audited

Cashmere Valley Bank (Cashmere) for the years 2004 through 2007 and assessed additional business and occupation (B O) for interest income Cashmere had received on investments in & tax

real estate mortgage investment conduits (REMICs) and collateralized mortgage obligations
CMOs).

Cashmere paid the additional tax and then filed a complaint for refund in superior court,
claiming that the interest income_was deductible
judgment, the
trial court denied

4292. 0 under RCW 82. 4.

On summary

Cashmere the deduction. Cashmere appeals, arguing that the

interest income qualifies for the deduction as interest on investments primarily secured by first
mortgages or trust deeds on nontransient residential property. Because Cashmere does not have
any legal recourse to the mortgages and trust deeds underlying its investments, its investments
are not primarily secured by them. Thus, we affirm.

i Unless noted otherwise, RCW 82. 4.refers to the 1980 version of the statute, which was 4292 0
in force
LAWS OF

during

the audit

ch. 23,

Download 42514-9.pdf

Washington Law