Income/Franchise:
Colorado DOR Proposes Rule Changes on Federal Conformity and QBI Deduction Addback
Proposed Repeal of Reg. section 39-22-103(5.3); Proposed New Reg. section 39-22-104(3)(r), Colo. Dept. of Rev. (6/14/23). The Colorado Department of Revenue (Department) is proposing changes to some administrative rules, one of which proposes to repeal an existing rule due to a 2022 Colorado Court of Appeals ruling [see State Tax Matters, Issue 2022-47, for more details on this case] that held Colorado’s rolling conformity income tax code incorporates retrospective changes to federal tax law in the calculation of taxable income. As currently written, the rule provides that the term “internal revenue code” incorporates changes to federal statute only on a prospective basis. Regarding the Internal Revenue Code (IRC) section 199A qualified business income (QBI) deduction for pass-through entities, the Department is also proposing a new rule intended to clarify the requirement to add back, in the calculation of Colorado taxable income, the amount that an electing pass-through entity owner is allowed to deduct under IRC section 199A. A virtual public hearing on both proposals is scheduled for July 18, 2023, and any written comments are due on the same date. Please contact us with any questions.
30 Rockefeller Plaza New York, NY 10112-0015 United States
About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities (collectively, the “Deloitte organization”). DTTL (also referred to as “Deloitte Global”) and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member firm and related entity is liable only for its own acts and omissions, and not those of each other. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more.
Deloitte provides industry-leading audit and assurance, tax and legal, consulting, financial advisory, and risk advisory services to nearly 90% of the Fortune Global 500® and thousands of private companies. Our professionals deliver measurable and lasting results that help reinforce public trust in capital markets, enable clients to transform and thrive, and lead the way toward a stronger economy, a more equitable society and a sustainable world. Building on its 175-plus year history, Deloitte spans more than 150 countries and territories. Learn how Deloitte’s approximately 415,000 peopleworldwide make an impact that matters at www.deloitte.com.
