Section 39-22-518 - Tax modification for net capital gains - definitions - repeal(1) For income tax years commencing on or after July 1, 1995, a modification, in the form of a reduction of income taxable by the state of Colorado, shall be allowed to any qualified taxpayer for the amount of income attributable to qualifying gains receiving capital treatment earned by the qualified taxpayer during the taxable year and included in federal taxable income.(2) For the purposes of this section: (a)(I) "Qualified taxpayer" for income tax years commencing before January 1, 2022, means any taxpayer with no overdue state tax liabilities and not in default on any contractual obligations owed to the state or to any local government within Colorado at the time the modification created under this section is claimed. This subsection (2)(a)(I) is repealed, effective December 31, 2030.(I.5) "Qualified taxpayer" means, for income tax years commencing on or after January 1, 2022, any taxpayer that has no overdue state tax liabilities; that is not in default on any contractual obligations owed to the state or to any local government within Colorado at the time the modification created under this section is claimed; and that is required to file a schedule F, profit or loss from farming, or successor form, as an attachment to the taxpayer's federal income tax return for the tax year in which the net capital gains arise.(II) For the purposes of this paragraph (a), "overdue state tax liabilities" includes uncollectible tax liabilities resulting from bankruptcy.(b)(I) "Qualifying gains receiving capital treatment" means the amount of net capital gains, as defined in section 1222 (11) of the internal revenue code, included in any qualified taxpayer's federal income tax return and: (B.5) For income tax years commencing before January 1, 2022, earned by the qualified taxpayer on either real or tangible personal property located within Colorado that was acquired on or after May 9, 1994, but before June 4, 2009, or on tangible personal property only located either within or outside Colorado that was acquired on or after June 4, 2009, and either of which has been owned by the qualified taxpayer for a holding period of at least five years prior to the date of the transaction from which the net capital gains arise if the transaction from which the net capital gains arise occurred during an income tax year that commenced on or after January 1, 2010; except that no more than one hundred thousand dollars of net capital gains described in this subsection (2)(b)(I)(B.5) are qualifying gains receiving capital treatment for any single income tax year. This subsection (2)(b)(I)(B.5) is repealed, effective December 31, 2030.(B.7) For income tax years commencing on or after January 1, 2022, earned by the qualified taxpayer on qualified real property that was acquired on or after May 9, 1994, but before June 4, 2009, and has been owned by the qualified taxpayer for a holding period of at least five years prior to the date of the transaction from which the net capital gains arise; except that no more than one hundred thousand dollars of net capital gains described in this subsection (2)(b)(I)(B.7) are qualifying gains receiving capital treatment for any single income tax year.(II) For purposes of this subsection (2)(b): (B) "Holding period" means an uninterrupted period of time.(C) "Qualified real property" means real property located in Colorado that is sold by the taxpayer and generates the qualifying gains receiving capital treatment and that is classified by the county property tax assessor immediately preceding the sale as agricultural land under section 39-1-102 (1.6)(a). If real property is sold as a type of investment package, then, in order to be qualified real property, at least seventy-five percent of the real property sold in the package must be classified by the county property tax assessor immediately preceding the sale as agricultural land under section 39-1-102 (1.6)(a).(3) Any reduction in Colorado taxable income caused by the modification allowed by this section shall not create any right to a cash refund for the year for which the modification is claimed, nor shall the reduction create any right to a financial or other tax benefit which may be carried forward by the qualified taxpayer.(4) Any taxpayer claiming a modification pursuant to this section shall submit with the taxpayer's income tax return in which such modification is claimed an affidavit, signed under penalty of perjury, stating that the taxpayer meets the definition of a qualified taxpayer as stated in paragraph (a) of subsection (2) of this section.Amended by 2023 Ch. 437,§ 2, eff. 8/7/2023.Amended by 2021 Ch. 298, § 8, eff. 6/23/2021.L. 94: Entire section added, p. 1104, § 1, effective May 9. L. 99: (2)(b)(I) and (2)(b)(II)(B) amended and (5), (6), and (7) added, p. 1284, § 1, effective August 4. L. 2000: (2)(b)(I), (5)(a), (5)(b)(I), (5)(b)(II), (5)(b)(V), (5)(b)(VI), (6), and (7) amended and (5)(c) and (5)(d) added, pp. 1456, 1459, §§ 1, 2, effective August 2. L. 2001: (7) amended, p. 1280, § 55, effective June 5; (5)(a), (5)(b)(I), (5)(b)(II), and (5)(b)(VI) amended, p. 394, § 5, effective August 8. L. 2009: (2)(b)(I)(A) and (2)(b)(I)(B) amended, (2)(b)(I)(B.5) and (8) added, and (2)(b)(I)(C), (2)(b)(I)(D), (2)(b)(I)(E), (2)(b)(I)(F), (5), (6), and (7) repealed, (HB 09-1366), ch. 432, pp. 2397, 2398, §§ 1, 2, 3, effective June 4. L. 2021: (2)(a)(I), (2)(b)(I)(B.5), and IP(2)(b)(II) amended and (2)(a)(I.5), (2)(b)(I)(B.7), and (2)(b)(II)(C) added, (HB 21-1311), ch. 1778, p. 1778, § 8, effective June 23.Subsection (8) provided for the repeal of subsections (2)(b)(I)(A), (2)(b)(I)(B), and (8), effective January 1, 2015. (See L. 2009, p. 2398.)
2023 Ch. 437, was passed without a safety clause. See Colo. Const. art. V, § 1(3). (1) For other provisions concerning adjustments to federal taxable income, see § 39-22-104 . (2) For the legislative declaration contained in the 2001 act amending subsections (5)(a), (5)(b)(I), (5)(b)(II), and (5)(b)(VI), see section 1 of chapter 133, Session Laws of Colorado 2001. (3) For the legislative declaration in HB 21-1311, see section 1 of chapter 298, Session Laws of Colorado 2021.