Washington HB 2292: Concerning taxation of a long-term capital gain of a section 1202 small business stock.

Bill Text

AN  ACT  Relating  to  taxation  of  a  long-term  capital  gain  of  a 1
section  1202  small  business  stock;  amending  RCW 82.87.020;  and 2
creating a new section.3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
Sec.  1.   RCW  82.87.020  and  2025  c  409  s  4  are  each  amended  to 5
read as follows:6
The  definitions  in  this  section  apply  throughout  this  chapter 7
unless the context clearly requires otherwise.8
(1)  "Adjusted  capital  gain"  means  federal  net  long-term  capital 9
gain:10
(a)  Plus  any  amount  of  long-term  capital  loss  from  a  sale  or 11
exchange that is exempt from the tax imposed in this chapter, to the 12
extent  such  loss  was  included  in  calculating  federal  net  long-term 13
capital gain;14
(b)  Plus  any  amount  of  long-term  capital  loss  from  a  sale  or 15
exchange that is not allocated to Washington under RCW 82.87.100, to 16
the  extent  such  loss  was  included  in  calculating  federal  net  long-17
term capital gain;18
(c) Plus any amount of long-term capital loss carryover that is 19
carried  forward  from  a  sale  or  exchange  that  is  not  allocated  to 20
H-2509.1
HOUSE BILL 2292
State of Washington69th Legislature2026 Regular Session
By Representatives Berg, Thai, Zahn, Duerr, and Reeves
Prefiled 01/07/26.   Read first time 01/12/26.   Referred to Committee 
on Finance.
p. 1HB 2292

Washington under RCW 82.87.100, to the extent such loss was included 1
in calculating federal net long-term capital gain;2
(d) Plus any amount of long-term capital loss carryover that is 3
carried forward from a sale or exchange that is exempt from the tax 4
imposed  in  this  chapter,  to  the  extent  such  loss  was  included  in 5
calculating federal net long-term capital gain;6
(e) Plus any amount of long-term capital loss carryover that is 7
carried forward from a sale or exchange that occurred before January 8
1, 2022, to the extent such loss was included in calculating federal 9
net long-term capital gain;10
(f)  Plus  any  amount  of  long-term  capital  gain  or  loss  from  the 11
sale  or  exchange  of  a  section  1256  contract  held  for  more  than  one 12
year not included in the calculation of federal net long-term capital 13
gain that would otherwise be included if Title 26 U.S.C. Sec. 1256 of 14
the internal revenue code did not exist;15
(g)  Less  any  amount  of  long-term  capital  gain  from  a  sale  or 16
exchange that is not allocated to Washington under RCW 82.87.100, to 17
the  extent  such  gain  was  included  in  calculating  federal  net  long-18
term capital gain; ((and))19
(h)  Less  any  amount  of  long-term  capital  gain  from  a  sale  or 20
exchange that is exempt from the tax imposed in this chapter, to the 21
extent  such  gain  was  included  in  calculating  federal  net  long-term 22
capital gain; and23
(i) Plus  any  amount  of  long-term  capital  gain  from  the  sale  or 24
exchange  of  an  internal  revenue  code  section  1202  qualified  small 25
business  stock,  to  the  extent  such  a  gain  or  loss  was  excluded  in 26
calculating federal net long-term capital gain.27
(2) "Capital asset" has the same meaning as provided by Title 26 28
U.S.C. Sec. 1221 of the internal revenue code and also includes any 29
other property if the sale or exchange of the property results in a 30
gain  that  is  treated  as  a  long-term  capital  gain  under  Title  26 31
U.S.C. Sec. 1231 or any other provision of the internal revenue code.32
(3) "Federal net long-term capital gain" means the net long-term 33
capital gain reportable for federal income tax purposes determined as 34
if Title 26 U.S.C. Secs. 55 through 59, 1256, 1400Z-1, and 1400Z-2 of 35
the internal revenue code did not exist.36
(4) "Individual" means a natural person.37
(5)  "Intangible  personal  property"  means  personal  property  that 38
is not tangible personal property.39
p. 2HB 2292

(6)  "Internal  revenue  code"  means  the  United  States  internal 1
revenue  code  of  1986,  as  amended,  as  of  July  25,  2021,  or  such 2
subsequent date as the department may provide by rule consistent with 3
the purpose of this chapter.4
(7) "Long-term capital asset" means a capital asset that is held 5
for more than one year.6
(8) "Long-term capital gain" means gain from the sale or exchange 7
of a long-term capital asset.8
(9)  "Long-term  capital  loss"  means  a  loss  from  the  sale  or 9
exchange of a long-term capital asset.10
(10) "Real estate" means land and fixtures affixed to land. "Real 11
estate"  also  includes  used  mobile  homes,  used  park  model  trailers, 12
used floating homes, and improvements constructed upon leased land.13
(11)(a) "Resident" means an individual:14
(i)  Who  is  domiciled  in  this  state  during  the  taxable  year, 15
unless the individual (A) maintained no permanent place of abode in 16
this state during the entire taxable year, (B) maintained a permanent 17
place of abode outside of this