Introduction to the Colorado S Corporation Return

The Colorado S corporation tax return is prepared for calendar, fiscal and short year corporations. Using entries from the federal tax return and Colorado worksheets, the following forms and schedules are prepared for the Colorado return:

Submit Colorado worksheets with the consolidating unit of a federal consolidated S corporation (QSSS) to produce a Colorado S corporation including Colorado qualified subchapter S subsidiaries. Using federal consolidated income, deductions and shareholder information, the Colorado S corporation is produced by the "generic" consolidated return method. Please refer to the Federal S Corporation Instruction Guide for further information.

Colorado uses the federal Shareholder information worksheet to specially allocate Colorado distributive share items. All federal special allocation features (i.e., single entry of ratios, tiered allocation, residual suppression) are available for Colorado purposes. Special allocation codes to distribute Colorado amounts to be used on federal worksheets include the following:

For additional information concerning special allocation and the various special allocation methods, refer to the instructions for federal worksheets. For special allocation codes of credit items reported on Form 106 CR, refer to the instructions for Colorado Credits worksheet.

An entry in the "State Code" field in the "Shareholder Information" Worksheet is used to treat the shareholder as a resident or nonresident on the state return. Therefore, entries are required in this field only when the state of residency is different than the state code entered in the mailing address.

Information for Form DR 0107 is entered on the federal Basic Information Worksheet (taxable year of S corporation, name, address, federal I.D. number of S corporation), Shareholder Information Worksheet (entity type code, name, address, social security number of the nonresident shareholder), Shareholder Information Worksheet (different taxable year of the nonresident shareholder), and Common State worksheet (Colorado I.D. number).

Information for Form DR 0108 is entered on Basic Information Worksheet (taxable year of S corporation, name, address, federal I.D. number of S corporation), Shareholder Information Worksheet (entity type code, name, address, social security number of the nonresident shareholder), and Common Statel worksheet (Colorado I.D. number).

To calculate Form CO 106 as a composite return enter the shareholder code for each nonresident shareholder on the Shareholder Information Worksheet in the "Shareholder Number" field, a different beginning and ending tax year dates in the "Date 1" and "Date 2" fields if applicable, "X" the "State Use Code" field and the state code "CO" in the "State Code" field if a multiple state return (leave the "State Code" field blank if a Colorado home state return).

Enter the shareholder number in the "Shareholder Number" field, "CO" in the "State Code" field and "X" in the "State Use - Alphabetic" field of the Shareholder Information worksheet, to suppress printing of both Forms DR 0107 and DR 0108 for a specific shareholder. Alternatively, enter "1' to suppress Form 107 only or "2" to suppress Form 108 only.