Colo. Code Regs. 39-22-504

Current through Register Vol. 47, No. 23, December 10, 2024

Rule 39-22-504 - Colorado Net Operating Losses

(1)Colorado Net Operating Losses of Individuals, Estates and Trusts.

(a)Computation of Loss. The Colorado net operating losses of individuals, estates and trusts shall be computed under the federal statutes and rules for computing net operating losses of individuals, estates and trusts. The Colorado net operating loss of resident individuals, estates and trusts shall be the same as the federal net operating loss except to the extent the modifications required and allowed by section 39-22-104, C.R.S., affect the computation of the Colorado loss.

(b)Carrybacks and Carryovers of the Colorado Net Operating Losses of Individuals, Estates and Trusts.

(i) Individual, estate and trust Colorado net operating losses incurred in taxable years beginning prior to January 1, 1984, could be carried back three years and forward fifteen. Such losses had to be carried back before they could be carried forward. Example: A 1983 individual Colorado net operating loss had to be applied in the following sequence: 1980, 1981, 1982, 1984, 1985, (and so on through 1998).

(ii) Individual, estate and trust Colorado net operating losses incurred in taxable years beginning on or after January 1, 1984, but before January 1, 1987, could not be carried back to a prior tax year. They could be carried forward and claimed as a modification in determining Colorado taxable income for up to fifteen years.

(iii) Individual, estate and trust Colorado net operating losses incurred in taxable years beginning on or after January 1, 1987, but before January 1, 1990 can be carried back three years to taxable years beginning prior to January 1, 1987, but only if the taxpayer elects to carry back a federal net operating loss, if any, incurred in the same tax year. Example: Taxpayer incurred 1988 federal and Colorado net operating losses of $40,300. He elects to forgo his federal net operating loss carryback and to carry his federal loss forward. As he has the potential of receiving the full benefit of this federal net operating loss carryforward for Colorado income tax purposes, he may not carry his 1988 Colorado loss back to any earlier years.

(iv) Individual, estate or trust Colorado net operating losses incurred in tax years beginning on or after January 1, 1987, may not be carried to any other tax year beginning on or after January 1, 1987. Federal net operating losses incurred in tax years beginning on or after January 1, 1987 and carried to tax years beginning on or after January 1, 1987, will be allowed for Colorado income tax purposes in lieu of any such Colorado net operating losses being allowed.

Example: A nonresident taxpayer incurred a 1990 federal net operating loss of $150,000 which he carried back and applied as follows: 1987- $80,000; 1988-$60,000; 1989- $10,000. $120,000 of the loss was from Colorado sources. The amount of the federal loss he can claim for Colorado purposes in 1988 is limited to the loss applied to 1988 for federal purposes ($80,000) or that part of his federal loss sourced to Colorado ($120,000).

Assume the taxpayer uses $46,000 of the loss to zero out his 1987 Colorado income. The amount of the loss he can use for 1988 for Colorado income tax purposes is the smaller of the federal loss applied ($60,000) or the remaining Colorado-source loss ($74,000).

Assume the taxpayer uses $31,000 of the loss to zero out his 1988 Colorado income. The amount of the loss he can use for 1989 for Colorado income tax purposes is the smaller of the federal loss applied ($10,000) or the remaining Colorado-source loss ($43,000).

The taxpayer would source the entire $10,000 federal net operating loss applied to 1989 to Colorado. The balance of the Colorado-source loss ($33,000) would cease to exist.

39-22-504

Colorado Register, Vol 37, No. 14. July 25, 2014, effective 8/14/2014

37 CR 18, September 25, 2014, effective 10/15/2014

37 CR 19, October 10,2014, effective 10/30/2014

37 CR 22, November 25, 2014, effective 12/16/2014

38 CR 04, February 25, 2015, effective 3/17/2015

38 CR 07, April 10, 2015, effective 4/30/2015

38 CR 11, June 10, 2015, effective 6/30/2015

38 CR 22, November 25, 2015, effective 12/15/2015

38 CR 24, December 25, 2015, effective 1/14/2016

38 CR 24, December 25, 2015, effective 1/19/2016

39 CR 01, January 10, 2016, effective 1/30/2016

39 CR 16, August 25, 2016, effective 9/14/2016

40 CR 08, April 25, 2017, effective 5/15/2017

40 CR 12, June 25, 2017, effective 7/15/2017

40 CR 16, August 25, 2017, effective 9/14/2017

40 CR 23, December 10, 2017, effective 1/1/2018

41 CR 14, July 25, 2018, effective 8/14/2018

41 CR 20, October 25, 2018, effective 11/14/2018

42 CR 02, January 25, 2019, effective 12/18/2018

42 CR 02, January 25, 2019, effective 12/18/2018, expires 4/17/2019

42 CR 06, March 25, 2019, effective 4/14/2019

43 CR 04, February 25, 2020, effective 3/16/2020

43 CR 13, July 10, 2020, effective 6/2/2020

43 CR 17, September 10, 2020, effective 9/30/2020

44 CR 03, February 10, 2021, effective 3/2/2021

44 CR 07, April 10, 2021, effective 4/30/2021

44 CR 08, April 25, 2021, effective 5/15/2021

45 CR 01, January 10, 2022, effective 1/30/2022

45 CR 04, February 25, 2022, effective 3/17/2022

45 CR 05, March 10, 2022, effective 3/30/2022

46 CR 11, June 10, 2023, effective 5/2/2023

46 CR 09, May 10, 2023, effective 5/30/2023