39-22-303.6–16 Alternative Apportionment. Basis and Purpose. The bases of this rule are §§ 39-21-112, 39-22-301, 39-22-303,

and 39-22-303.6, C.R.S. The purpose of this rule is to provide guidance regarding the use of alternative apportionment methods. Consistent with the General Assembly’s adoption of § 39-22-303.6, C.R.S., these rules are intended to conform the state’s income tax laws to the Multistate Tax Commission’s model statute and regulation except when those model provisions are inconsistent with Colorado statute. See 2018 Colo. Sess. Laws, ch. 369, § 1(2). (1) General Rule. Section 39-22-303.6(9), C.R.S., provides that if the allocation and apportionment provisions of § 39-22-303.6, C.R.S., do not fairly represent the extent of the taxpayer's business activity in Colorado, the taxpayer may petition for, or the Department may require, with respect to all or any part of the taxpayer's business activities, if reasonable: (a) separate accounting; (b) the inclusion of one or more additional factors that will fairly represent the taxpayer's business activity in Colorado; (c) the inclusion of any receipts of a taxpayer otherwise excluded under § 39- 22-303.6(1)(d), C.R.S., including those from hedging transactions or from the maturity, redemption, sale, exchange, loan, or other disposition of cash or securities; or (d) the employment of any other method, notwithstanding any other provision of § 39-22-303.6(9), C.R.S., to effectuate an equitable apportionment or allocation of the taxpayer's income, fairly calculated to determine the net income derived from or attributable to sources in Colorado. (2) Section 39-22-303.6(9)(b), C.R.S., permits a departure from the allocation and apportionment provisions of § 39-22-303.6, C.R.S., only in limited and specific cases where the apportionment and allocation provisions contained in § 39-22- 303.6, C.R.S., produce incongruous results. (3) In the case of certain industries, transactions, or activities, Rules 39-22-303.6–1 through –13, with respect to the apportionment formula, may not set forth appropriate procedures for determining the apportionment factor. Nothing in § 39-22-303.6(9)(b), C.R.S., or in this Rule 39-22-303.6–16 shall preclude the Department from establishing appropriate procedures under §§ 39-22-303.6(4) through (6), C.R.S., for determining the apportionment factor for each such industry, but such procedures shall be applied uniformly. (4) In the case of certain taxpayers, the general rules under §§ 39-22-303 and 39- 22-303.6, C.R.S., and the rules thereunder may not set forth appropriate procedures for determining gross income or the apportionment factor. Nothing in § 39-22-303.6(9)(b), C.R.S., or in this rule, shall preclude the Department from distributing or allocating gross income and deductions under § 39-22-303(6), C.R.S.