Colorado § 39-22-108 - Credit for tax paid other states.

§ 39-22-108. Credit for tax paid other states.

(1) With respect to all taxable years commencing on or after January 1, 1987, the amount of taxes on federal taxable income accrued to another state, the District of Columbia, or a territory or possession of the United States, on income derived by a resident individual, estate, or trust from sources in another state, the District of Columbia, or a territory or possession of the United States, shall be allowed as a credit against the tax computed under provisions of this article.

(2) The amount of credit taken under this section shall be subject to each of the following limitations:

(a) The amount of the credit for taxes on the federal taxable income taxed by another state, the District of Columbia, or a territory or possession of the United States shall not exceed the same proportion of the tax against which such credit is taken which the taxpayer's federal taxable income from the sources within such state, the District of Columbia, or a territory or possession of the United States bears to his entire federal taxable income for the same period;

(b) The total amount of the credit shall not exceed the same proportion of the tax against which such credit is taken which the taxpayer's federal taxable income from sources outside of Colorado bears to his entire federal taxable income for the same taxable year; and

(c) Federal taxable income shall be deemed to be from sources in another state in the same ratio as the modified federal adjusted gross income is from sources in such state.

(3) If accrued taxes when paid differ from the amounts claimed as credits by the taxpayer or if any tax paid is refunded in whole or in part, the taxpayer shall notify the executive director, who shall redetermine the amount of tax due for the years affected; the amount of tax, if any, found to be due upon such redetermination shall be paid by the taxpayer upon notice and demand or the amount of tax overpaid, if any, shall be credited or refunded to the taxpayer in accordance with the provisions of section 39-21-108. In the case of such a tax accrued but not paid, the executive director, as a condition precedent to the allowance of a credit, may require the taxpayer to deposit a surety bond or other security acceptable to the executive director in such amount as he may require, conditioned upon the payment by the taxpayer of any amount of tax found to be due upon any such redetermination.

(4) The credits provided for in this section, irrespective of the method of accounting employed by the taxpayer in keeping his books, shall be taken in the year in which the taxes of another state, the District of Columbia, or a territory or possession of the United States accrue, subject to the conditions prescribed in subsection (3) of this section.

(5) The credits provided by this section shall be allowed only if the taxpayer furnishes to the executive director all information necessary for the verification and computation of such credits as the executive director, by regulation, may prescribe.

Source: L. 87: Entire part R&RE, p. 1430, § 2, effective June 22. L. 88: (2)(a) and (2)(b) amended and (2)(c) added, p. 1313, § 4, effective May 29.

Editor's note: This section is similar to former § 39-22-108 as it existed prior to 1987.