TAX NEWS - January 2010

Colorado Corporation Income Filing

Colorado's corporation income tax return starts with the corporation's federal taxable income.  Therefore, the federal deductions and business exemptions have already been subtracted.  For this reason, no lines for deductions and business exemptions appear on the Colorado form.  Then, on Colorado's 112 form or in any Colorado corporation income tax electronic filing option, the state requires certain additions to federal taxable income and offers subtractions from federal taxable income before the corporation arrives at its Colorado taxable income.  The Colorado taxable income is then taxed at a flat rate of 4.63% (may have been changed).  On the Colorado 112 corporation form, be sure to attach schedules. For example, if a corporation is apportioning income, the taxpayer must attach an accurately completed SF apportionment schedule or else the apportionment election will be disallowed.  Additionally, select correct apportionment methods. For example, do not select the gross Colorado sales apportionment method if the corporation is electing to be taxed on its Colorado taxable income. See Income Tax Common Filing Errors for addtional filing tips.

Corporations that are members of an affiliated group of corporations, as defined in section 1504 of the federal Internal Revenue Code, must determine whether to file separate returns, a consolidated return, a combined return, or a combined/consolidated return. Please see Publication FYI Income 60, Combined and Consolidated Corporation Returns.

A Corporation doing business only in Colorado will compute its tax on 100% of the Colorado taxable income. However, a corporation doing business in more than one state must apportion its taxable income to any states in which the corporation is doing business.

Returns are due on the 15th day of the fourth month following the close of the taxable year. A corporation is granted an automatic six-month extension of time for filing. If either of these dates fall on a weekend or holiday, the tax should be filed by the next business day.