39-30-104 - Enterprise Zone Investment Tax Credit

Basis and Purpose. The statutory bases for this rule are sections 39-21-112(1), 39-30-103(7)(a), 39-30-104, 39-30-108(1), 39-22-507.5, and 39-22-507.6, C.R.S. The purpose of this rule is to clarify the application of the enterprise zone investment tax credit.

(1) Depreciation Expense Required. For the purpose of section 39-30-104, C.R.S., "qualified property" includes only property to which section 168 of the Internal Revenue Code would have applied, or any other property with respect to which depreciation would have been allowable pursuant to section 167 of the Internal Revenue Code, that has a useful life of 3 years or more. If a taxpayer fully expenses the acquisition of any property pursuant to section 179 of the Internal Revenue Code and recovers its full cost in one year, then depreciation is not allowable and the property does not qualify for the credit. References in this paragraph (1) to sections of the Internal Revenue Code are to those sections as they existed immediately prior to the enactment of the federal "Revenue Reconciliation Act of 1990."

(2) Limit on Amount of Credit. Pursuant to section 39-30-104(2)(c)(I)(B), C.R.S., the amount of credit a taxpayer may claim for a tax year is limited to seven hundred fifty thousand dollars; except that any credits carried forward from a tax year commencing prior to January 1, 2014 are not subject to this limit. For the purpose of this limitation, any refund of the credit that a taxpayer receives for the tax year pursuant to section 39-30-104 (2.6), C.R.S., is included in the amount of credit the taxpayer claims for that tax year. Therefore, a taxpayer who receives a refund of seven hundred fifty thousand dollars cannot claim for the same tax year any additional credit from any tax year commencing on or after January 1, 2014 to offset tax.

(3) Related Investment Tax Credits. A taxpayer cannot claim both the credit allowed pursuant to section 39-30-104, C.R.S., and the credit allowed pursuant to section 39-22-507.5, C.R.S., (the "old" investment tax credit) for the same qualified investment property. A C corporation may claim both the credit allowed pursuant to section 39-30-104, C.R.S., and the credit allowed pursuant to section 39-22-507.6, C.R.S., (the "new" investment tax credit) for the same qualified investment property.

(4) Used Solely and Exclusively in an Enterprise Zone for at Least One Year. The credit authorized by section 39-30-104, C.R.S., is allowed for the tax year in which the investment is first placed in service, as determined by the applicable sections of the Internal Revenue Code. The credit is allowed only with respect to qualified property used solely and exclusively in an enterprise zone for at least one year. The one-year period commences on the date the investment is first placed into service. If a taxpayer files an income tax return claiming the credit within the one-year period, the taxpayer must file an amended income tax return to fully rescind the credit claim if the property is used anywhere outside of an enterprise zone before the conclusion of the one-year period.

(5) Pre-certification. No credit is allowed pursuant to section 39-30-104, C.R.S., with respect to any property acquired by the taxpayer, or with respect to which the taxpayer paid or incurred any expense, prior to the taxpayer's submission of a pre-certification form to the enterprise zone administrator pursuant to section 39-30-103(7)(a), C.R.S.

Notes

39-30-104

42 CR 08, April 10, 2019, effective 5/15/2019 44 CR 18, September 25, 2021, effective 10/15/2021 45 CR 05, March 10, 2022, effective 3/30/2022

1. Ball Corporation v. Fisher, 51 P.3rd 1053 (Colo. 2001).