39-22-304(3)(j) Corporate Subtraction for Section 78 Dividend. Basis and Purpose. The bases for this rule are sections 39-21-112(1), 39-22-103(5.3),

and 39-22-304(3)(j), C.R.S. The purpose of this rule is to clarify the application of section 39-22-304(3)(j), C.R.S., regarding the subtraction from federal taxable income of amounts treated as dividends pursuant to section 78 of the Internal Revenue Code. (1) General Rule. The subtraction allowed pursuant to section 39-22-304(3)(j), C.R.S., is limited to the amount treated as a dividend and included in a C corporation’s federal taxable income pursuant to section 78 of the Internal Revenue Code. The subtraction is not allowed for any part of an amount treated as a dividend pursuant to section 78 of the Internal Revenue Code that is deducted in the calculation of federal taxable income. (2) Coordination with Section 250. No subtraction is allowed for any amount treated as a dividend pursuant to section 78 of the Internal Revenue Code that is: (i) attributable to global intangible low taxed income pursuant to section 951A and 960(d) of the Internal Revenue Code; and (ii) deducted, pursuant to section 250(a)(1)(B)(ii) of the Internal Revenue Code, in the calculation of federal taxable income. (3) Subtraction Allowed Only to C Corporations. The subtraction authorized by section 39-22-304(3)(j), C.R.S., is allowed only to C corporations subject to Colorado income tax imposed by Part 3 of Article 22 of Title 39, C.R.S. The subtraction is not allowed to any individual, estate, or trust subject to Colorado income tax imposed by Part 1 of Article 22 of Title 39, C.R.S.