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Partnership Income Tax | Letter Rulings
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Private Letter Rulings and General Information Letters
Businesses and individuals can request a general information letter or private letter ruling on any tax administered by the department.
General information letters are general discussions of tax issues that are not specifically addressed in other department publication, such as FYIs, rules
regulations, or form instructions
. General Information Letters are general statements of department understanding and cannot be relied upon as binding guidance.
Private letter rulings are specific determinations of the tax consequences of a proposed or completed transaction. Unlike general information letters, private letter rulings are binding on the department and, therefore, provide taxpayers with greater certainty for their business and personal taxes. However, private letter rulings can only be relied upon by the party to whom the ruling is issued. Private letter rulings cannot be relied upon
by any taxpayer other than the taxpayer to whom the ruling is made. For more information about general information letters and private letter rulings including fee amounts and how to submit a request, please see department regulation
Enterprise Zone Investment Tax Credit
The conversion of the Project Company from a disregarded entity to a partnership or, alternatively, the technical dissolution of the original Project Partnership and transfer of Project to newly formed New Project Partnership, within one year of Project being placed into service does not disqualify Taxpayer from claiming the enterprise zone investment tax credit.
Credit for Taxes Paid to Another State
Taxpayers are entitled to a credit for taxes paid to Ohio on income that Colorado sources to Ohio. Taxpayers determine the amount of income sourced to Ohio by using an average of the limited liability company’s apportionment ratios for the three tax years immediately preceding the tax year in which the husband’s interest in the limited liability company was sold.
Acquisition and Restructuring Transaction
Both the partnership income received by the corporate partner and the gain the corporate partner realized from the sale of its interest in the partnership are business income for the corporate partner. Based on multiple factors appertaining to the sale, the gain from the sale is excluded from the corporate partner’s apportionment factor in determining its Colorado tax.
LCC Employee in Colorado
If a company does not fall within the protection of P.L 86-272, members of the S corporation must file a Colorado income tax return if the S Corporation has substantial nexus with Colorado.
S Corporation Colorado Source of Income
Subchapter S corporations are not subject to Colorado income tax. A Subchapter S corporation is not required to register an income tax account or withholding account with the Department. A Subchapter S shareholder may have an obligation to file an income tax return and pay Colorado income taxes if the person is a resident, or, if not a resident, the nonresident has any income from the sources described in §39-22-109. C.R.S.
Net Capital Gain From The Sale of Business Assets
Taxpayer, a limited liability company, and its members cannot subtract from Colorado taxable income net capital gain resulting from the sale of the Taxpayer’s goodwill because the sale did not qualify as a sale of an ownership interest.
Nonresident Directors Subject to State Income Tax
Nonresident corporate directors who attended two-day board of directors' meeting in Colorado incurred state income tax liability based on the number of days performing duties in Colorado.