39-22-303(11)(c) Apportionment of Income on a Combined Report or Consolidated Return. Basis and Purpose. The bases for this rule are §§ 39-21-112(1), 39-22-301, 39-22-
303, 39-22-303.6, 39-22-303.7, 39-22-303.9, and 39-22-305, C.R.S. The purpose of this rule is to clarify how an affiliated group of C corporations apportion their income when included in a combined report or consolidated return. (1) When filing a combined report, the affiliated group of C corporations shall file one return, apportioning income under the provisions of §§ 39-22-303.6, 39-22-303.7, or 39-22-303.9, C.R.S., and summing the numerators of each affiliated C corporation doing business in Colorado to derive a single apportionment factor for the combined group. (a) In making any calculation pursuant to this rule, including calculations of income, gross receipts, apportionment, or minimal commercial activity determinations, all intercompany transactions shall be eliminated before making any such calculation. (b) Example: Corporations A, B, and C are an affiliated group of C corporations meeting three of the six tests in § 39-22-303(11), C.R.S. Corporations A and B are doing business in Colorado under 1 CCR 201-2, Department 39-22-301.1 and C is not. The Colorado receipts factors of the three corporations are as follows: Colorado Receipts Total Receipts Corporation A $5,160,118 $7,652,492 Corporation B $1,642,720 $80,009,652 Corporation C $183,290 $814,005 The combined receipts factor would be as follows: Colorado receipts (A+B) = $6,802,838 Total receipts (A+B+C) = $88,476,149 (Assumes no intercompany transactions.) Combined receipts factor (Colorado receipts divided by total receipts) = 7.6889% The 7.6889% receipts factor is applied to the combined modified federal taxable income (after elimination of intercompany transactions) of the affiliated group to determine the Colorado taxable income to be reported on the combined report. Cross References 1. For additional information on doing business in Colorado, see 1 CCR 201-2, Rule 39-22-301(1). 2. For information on which members of an affiliated group must be included in a combined report see 1 CCR 201-2, Rule 39-22-303(11)(a). 3. For additional information for taxpayers subject to multiple apportionment methods, see 1 CCR 201-2, Rule 39-22-303.6–3.