Does the state of CO allow passive loss carryover?

[lmlefty]

I have a K-1 Equivalent form for the state of Colorado.  It has a several hundred dollar loss and there's no other income in that state (I'm a TN resident).  I'm trying to figure out if its worth filing a Colorado state return or not.

[IsabellaG]

Yes, the state does allow for passive loss carryovers for nonresidents. See this link:https://www.sos.state.co.us/CCR/GenerateRulePdf.do?ruleVersionId=6219&fileName=1%20CCR%20201-2

"Colorado passive losses of nonresident individuals. A nonresident of Colorado may source to Colorado passive losses carried over from prior tax years and claimed in arriving at federal adjusted gross income to the extent such nonresident had Colorado source passive losses in prior tax years not previously claimed for Colorado income tax purposes."

[1bustercat1]

Where does this adjustment go on CO forms for a non-resident?  I've utilized the losses on federal level by the way, but had no other source of income in CO in prior year(s), hence th CO PAL c/o.

[james51]

Isabella,

Does Colorado allow an NOL to be used on a composite return?  A partnership has all Colorado non residents and they have incurred a loss for the last three years.  This year they have income.  Can i offset the NOL from previous years against this years income on the composite return?

Jim

[MaryK4]

"Certain excess income tax deductions (such as net operating losses) and credits can be carried forward or carried back to a prior or subsequent tax year."

See Income 54: Nonresident Partners and Shareholders of Partnerships and S Corporations

@james51

[Tax2019Pay]

Hi, Isabela: Just to follow up on your June 1, 2019 answer to the question on K-1 passive loss carryover.  I have received one K-1 with loss.  Part III box 2 is negative.  I am in the east coast and the asset is in Colorado (I have never lived in Colorado).  I have no other gain or loss from Colorado.  I know with the loss, I do not have to file Colorado nonresident tax return.  But should I file to ensure the passive loss is covered year over year that I can use the passive loss carryover in later years?  Or Can I file only when Box 2 turns positive in a few years and then report accumulative passive loss carryover then? Thanks

[MarilynG1]

You probably should file a Colorado Non-Resident return.   You did collect Rental Income there (even though your expenses created a rental loss).

Since some of your rental expenses were depreciation (and possibly 179 deduction), Colorado may or may not apply the same guidelines as federal, though from what I could find, they do. 

Going through the Colorado interview should verify that.

From the Colorado DOR:

"A nonresident is required to file a Colorado income tax return if they:

• are required to file a federal income tax return, and
• had taxable Colorado-sourced income.

Nonresidents will initially determine their Colorado taxable income as though they are full-year residents. Nonresident of Colorado will complete the Colorado Individual Income Tax Return (DR 0104) and the Nonresident Tax Calculation Schedule (DR 0104PN) to determine what income will be claimed on the DR0104 form."

Here's a link to Colorado DOR.

Why Would I File a Non-Resident Return

@Tax2019Pay

[Tax2019Pay]

Thanks. I assume that you would also advise to file nonresident returns for Oregon and Arizona in addition to Colorado in my case, correct?

[ErnieS0]

Yes file Arizona and Oregon income tax returns to preserve passive loss carryovers in those states @Tax2019Pay.

One thing to consider is the nature of your investments. If they are never going to make money in those states, you will be spending money to file tax returns for carryovers that you can never use.