2023 Colorado Revised Statutes › Title 39 - TAXATION (§§ 39-1-101 — 39-37-301) › SPECIFIC TAXES (§§ 39-20-101 — 39-37-301) › INCOME TAX (§§ 39-22-101 — 39-22-5508) › Article 22 - Income Tax (§§ 39-22-101 — 39-22-5508) › Part 5 - SPECIAL RULES (§§ 39-22-501 — 39-22-570) › Section 39-22-504 - Net operating losses

(1)
(a)
A net operating loss deduction shall be allowed in the same manner that it is allowed under the internal revenue code except as otherwise provided in this section. The amount of the net operating loss that may be carried forward and carried back for Colorado income tax purposes shall be that portion of the federal net operating loss allocated to Colorado under this article 22 in the taxable year that the net operating loss is sustained.
(b)
For losses incurred after December 31, 2017, the eighty percent limitation set forth in section 172 (a)(2) of the internal revenue code shall apply without regard to the amendments made in section 2303 of the March 2020 "Coronavirus Aid, Relief, and Economic Security Act", Pub.L. 116-136.
(2)
With respect to individuals, estates, and trusts:
(a)
A net operating loss incurred in a taxable year beginning prior to January 1, 1987, may be carried forward the same number of years a federal net operating loss may be carried forward. Such net operating losses may not be carried back to an earlier tax year.
(b)
Net operating losses incurred in taxable years beginning on or after January 1, 1987, may be carried back to the same years as is a federal net operating loss incurred in such year; except that no such loss may be carried to a taxable year beginning on or after January 1, 1987. Such losses may not be carried forward to subsequent tax years.
(3)
(a)
Net operating losses of corporations generated in income tax years commencing before January 1, 2021, may be carried forward for the same number of years as allowed for a federal net operating loss. Net operating losses of corporations may not be carried back to an earlier tax year.
(b)
Net operating losses of corporations generated in income tax years commencing on or after January 1, 2021, may be carried forward for twenty years. Net operating losses of corporations may not be carried back to an earlier tax year.
(4)
If a financial institution suffers a net operating loss for any taxable year beginning on or after January 1, 1984, and before January 1, 2021, the amount of the unused net operating loss may be carried forward to each of the fifteen years following the taxable year of such loss. For the purposes of this subsection (4), "financial institution" means any institution to which section 585 or 593 of the internal revenue code applies.
(5)
No corporation may carry forward a net operating loss to an income tax year commencing prior to January 1, 2009, if, for such year, the corporation uses a different method of allocating or apportioning income from the one it used in the period in which the loss occurred, unless such different method is approved by the executive director. A corporation may carry forward a net operating loss to any income tax year commencing on or after January 1, 2009, regardless of the method of allocating or apportioning income for such year.
(6)
(a)
Notwithstanding any other provision of this section, the maximum amount of net operating loss that a corporation may subtract from federal taxable income pursuant to section
39-22-304 (3)(g)
for a tax year commencing on or after January 1, 2011, but prior to January 1, 2014, is two hundred fifty thousand dollars.
(b)
All net operating losses may be carried forward one additional year for each tax year that a corporation is prohibited pursuant to paragraph (a) of this subsection (6) from subtracting a portion of such net operating losses from the corporation's federal taxable income.
(c)
An amount equal to the amount of all net operating losses that a corporation is prohibited pursuant to paragraph (a) of this subsection (6) from subtracting from federal taxable income multiplied by a rate of interest equal to three and one-quarter percent per annum for the period during which such net operating losses are prohibited shall be added to the allowable net operating loss that is carried forward by the corporation, and, for the purpose of section
39-22-304 (3)(g)
, shall be considered net operating loss.
Amended by 2020 Ch. 135, § 2, eff. 9/14/2020.
Amended by 2020 Ch. 277, § 4, eff. 7/11/2020.
L. 64: R&RE, p. 777, § 1. C.R.S. 1963: § 138-1-59. L. 77: (5) added, p. 1795, § 2, effective May 26. L. 83: (1) amended and (2), (3), and (5)(a) repealed, p. 2097, §§ 4, 5, effective 1/1/1984. L. 87: (6) added, p. 1458, § 1, effective May 4; entire section R&RE, p. 1446, § 17, effective June 22. L. 88: (5) added, p. 1315, § 10, effective May 29. L. 2008: (5) amended, p. 966, § 10, effective 1/1/2009. L. 2010: (6) added, (HB 10 -1199), ch. 67, p. 67, § 2, effective February 24. L. 2016: (4) amended, (SB 16-189), ch. 794, p. 794, § 110, effective June 6. L. 2020: (1) amended, (HB 20-1420), ch. 1359, p. 1359, § 4, effective July 11; (3) and (4) amended, (HB 20-1024), ch. 588, p. 588, § 2, effective September 14.
House Bill 87-1243 adding subsection (6) was superseded by House Bill 87-1331 and included in House Bill 87-1331 as (4).
(1) For the short title ("Tax Fairness Act") in HB 20-1420, see section 1 of chapter 277, Session Laws of Colorado 2020. (2) For the legislative declaration in HB 20-1024, see section 1 of chapter 135, Session Laws of Colorado 2020.