Washington Supreme Court Affirms Deductibility of Initiation Fees in Royal Oaks Country Club Case

• Washington Supreme Court ruled in Royal Oaks Country Club v. State of Washington, Department of Revenue
• Initiation fees at Royal Oaks qualify as “bona fide” initiation fees
• Fees are wholly deductible under Washington’s B&O tax statute
• Initiation fees were paid solely for the privilege of club membership, not for goods or services
• Department of Revenue argued part of initiation fees should be taxable, but Court disagreed
• Court differentiated between access to club facilities and use of goods and services
• Membership dues, not initiation fees, cover costs associated with using club amenities
• Initiation fees represent the value of entry into the club, not ongoing services
• “Bona fide” fees not linked to ongoing goods or services are fully deductible under Washington’s B&O tax law
• Decision provides clarity on deductible membership fees for clubs and similar organizations

Source: salestaxinstitute.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

---

---