The DC Court of Appeals upheld the DC Office of Tax and Revenue’s (OTR) determination that the incorporated owner of substantially all of a high technology partnership was not entitled to claim qualified high technology company (QHTC) benefits generated by the partnership.

The partnership at issue qualified for DC QHTC tax incentives. One of the available QHTC tax incentives was a reduced corporate franchise tax rate – 0% for 5 years and a 6% rate thereafter. The corporate partner claimed the preferential QHTC tax rate against the partnership’s flow-through income for tax years 2015-2017. The OTR later assessed the taxpayer and asserted that it was not eligible to claim the QHTC benefits.

On appeal, the DC Court of Appeals held that the partner was not entitled to claim the QHTC benefits. The court first concluded that federal partnership principles did not support the taxpayer because federal and DC law differ with respect to the treatment of partnership income. Further, the District’s statutory definition of “gross income” did not contemplate the exclusion of QHTC income from the tax base. The Court also reviewed legislative history and concluded that the DC Council understood that the QHTC legislation did not eliminate franchise taxes on incorporated entities – such as the taxpayer – that invested in unincorporated QHTCs.

Bloomberg, Inc. v. D.C. Office of Tax & Revenue, 356 A.3d 510 (D.C. Apr. 1, 2026).