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CCH Axcess Tax

Introduction to the Colorado Partnership Return

Colorado partnership returns are prepared for calendar-year, fiscal-year, and short-year partnerships. From amounts on the federal return and entries on Colorado workshops, the following forms and schedules are prepared for the Colorado return:

• Form 106, Partnership Return
• Form 106 CR, Partnership Credits
• Form 106 EP, Estimated Tax payment Vouchers
• Form DR 158-N, Extension Payment Voucher
• Form DR 1316, Colorado Source Capital Gain Affidavit
• Form DR 1366, Colorado Enterprise Zone Carryforward Schedule
• Schedule K-1 Equivalent for each partner
• Form DR 0107, Nonresident Partner Agreement
• Form DR 0108, Nonresident Partner Tax Remittance

There are no federal attachments. Also, as requested by the Colorado Department of Revenue, Schedule K-1 equivalents are not included in the filing copy.

Composite Nonresident Return

A composite return is prepared when there is an entry indicating that at least one partner elects to be included. To indicate that all nonresident partners elect to be included in a composite return, enter "Include in composite return" in the treatment of all nonresident partners field of the Colorado composite worksheet.

To indicate that a particular nonresident elects inclusion (while others do not), usestate schedule K-1 information worksheets. Enter the nonresident's partner number, and enter "1" in the "State Use Code" box in the "Other State Information" section. In a multi-state return, be sure to enter "CO" in the "State Code" field at the top of the form.

Form DR 0107, "Nonresident Partner Agreement", is printed for each nonresident partner not electing inclusion in a composite return, unless a different print option code is entered. That is: If there is no entry in the~ code field of the composite worksheet and no entry for a particular nonresident partner on state schedule K-1 information worksheets, Form DR 0107 is printed for each nonresident partner.

Three alternate print options are available for all or selected non-electing nonresident partners. To select the same print option for all, use the code field of the Colorado composite worksheet. Enter "2" to print Form DR 0108, Nonresident Partner's Tax Remittance, for each nonresident. Enter "3" to print both Forms DR 0107 and DR 0108 for each. Enter "4" to print neither form.

To select an alternate print option for a particular non-electing nonresident partner, use state schedule K-1 information worksheets. Enter the nonresident's partner number, and enter a print option code (as above) in the "State Use Code" box in the "Other State Information" section at the bottom of the form. In a multi-state return, be sure to enter "CO" in the "State Code" Box at the top of the form.

If Form DR 0107 is to be printed for a partner, and that partner has a taxable year other than the calendar year, enter the beginning and ending dates of the partner's taxable year on state schedule K-1 information worksheets in the "State Use Date 1" and "State Use Date 2" boxes. If there are no entries in these boxes, the partner's taxable year is indicated as the calendar year on Form DR 0107.

If a composite return is included in a return to be filed late without an extension of time to file, and there is a balance due, the late payment penalty and interest are computed if requested state penalties worksheets. The late payment penalty is computed as 5% of the balance due for the first month and 0.5% for each additional month, to a maximum of 12% of the balance due. Interest is computed at an annual rate of 3%.

The CO 106-EP will be prepared for the partnership including all partners that will have an estimated tax liability that will.

federal extension worksheets and there is a balance due, Form DR 158-N, Extension Payment Voucher, is produced with 90% of the balance due as the amount to be paid. To override the amount to be paid with Form DR 158-N, use Interview Form CO4.

Federal Interview Form Notes and Features

Depreciation

Colorado allows federal depreciation. State depreciation is computed from depreciation entries on the "Federal Depreciation and Amortization" interview forms. Entries on the "State Depreciation and Amortization" interview forms are not used to compute Colorado depreciation.

FS Codes

The Colorado return starts from federal income. FS entries are not required. However, see the instructions for municipal bond interest, below.

Generally, income and expenses on the federal return carry to the Colorado return. Colorado modifications of federal income must be entered on Colorado Income\Deduction worksheets. However, the following items from the federal return are reported automatically as Colorado modifications:

• Interest on U.S. obligations
• Municipal bond interest from states other than Colorado
• Employment credits wage reduction

U.S. Obligations

Interest on United States obligations is included in modifications decreasing federal income.

Municipal Bond Interest

Colorado includes municipal bond interest from sources outside the state in Colorado income. In the tax return input method, interest entered on the interest worksheets carries to Colorado Form 106 as a modification increasing federal income. Be sure to indicate the state of origin for municipal bond interest. Enter the state code in the "State" box (not the "State Use" box).

Employment Credits

Wages or salaries eligible for the federal Employment Credits and not deducted on the federal return are carried to Colorado Form 106 as a modification decreasing federal income.

Non-Individual Partner's Colorado Account Number

Enter the Colorado account number for any non-individual partner on state schedule K-1 information worksheets, in the "Other State Information" section, in the "State Use" area. Be sure to enter the partner number. In a multi-state return, be sure to enter "CO" in the "State Code" box.

Colorado Special Allocations

Colorado uses special allocation worksheets to specially allocate Colorado distributive share items. Use the following Colorado special allocation codes.

For additional information concerning special allocations and the various allocation methods, refer to the instructions for special allocation worksheets.

K-1 Suppression

Usepartner's general option worksheets to suppress all state and city Schedules K-1 (or equivalents).

K-1 Statement Suppression

Usepartner's general option worksheets to suppress supporting statements for the Colorado Schedule K-1 equivalent. See the instructions under "Suppress Schedule K-1 Statements Code."

Overflow statements of Colorado modifications increasing or decreasing federal income (produced when there are too many modifications to fit on the Schedule K-1 equivalent) are not suppressed.

Final and Amended K-1s

The Schedule K-1 equivalent is designated as final or amended if the partner's federal Schedule K-1 is final or amended. In addition, if the Colorado return is final or amended, all Schedule K-1 equivalents are designated as final or amended. You can use state schedule K-1 information worksheets, to override these defaults, or to designate a Schedule K-1 equivalent separately.

Partners' Percentages for Printing Purposes Only

You can use state schedule K-1 information worksheets, to override the partners' percentages for printing purposes only on the Colorado Schedule K-1 Equivalent. Enter "CO" in the "State Code" box. If this box is blank, the percentages are printed for every state in the return.

There are two ways to enter percentages: ratio ID numbers and exact text.

To use ratio ID numbers, enter a ratio number for "End of Year Profit" column and/or "End of Year Capital" column respectively, and define the ratio on the ratio allocation section.

In addition to ratio references, an option is provided to print text entries in place of percentages. See the federal instruction guide for use of the optional text entries or preparer-specified text entries for all partners. Colorado uses entries in the "End of Year Profit" column and "End of Year Capital" column.

To enter a percentage exactly as it will appear on a partner's Colorado Schedule K-1 Equivalent; first enter the partner number in the "State Capital Account" section. This entry MUST match the partner number on Interview Form K-1. On the corresponding line in the next section ("State Partners' Percentages for Printing Purposes Only") enter up to 11 characters (numbers or letters) in "End of Year Profit" column and/or "End of Year Capital" column, respectively. The entry is printed exactly as entered, right-justified against a pre-printed percentage symbol. Do not include the percentage symbol in your entry. An entry of "50" is printed as "50%" (including the pre-printed symbol). "50.00000000" as "50.00000000%".

Colorado Electronic Filing Information

Colorado Business Tax returns may be filed electronically for utilizing the Federal/State Electronic Filing Program. This program allows you to file both the Federal and Colorado returns in one transmission.

Return Eligibility

The following Colorado forms are eligible for electronic filing:

• 106 P1 Colorado State Partnership Return of Income
• 106 P2 Colorado State Partnership Return of Income
• 106 P3 Colorado State Partnership Return of Income
• 106 P4 Colorado State Partnership Return of Income
• 106 CR Colorado Partnership Credit Form
• DR 1316 Colorado Source Capital Gain Affidavit
• DR 1366 Colorado Enterprise Zone Carryforward Schedule

Exclusions from Colorado Electronic Filing

Colorado e-file is not available to taxpayers that file the following forms:

• DR 0107 Statement Nonresident Partner Agreement/Remittance
• DR 0108 Statement of Tax Remittance for Nonresident Partner
• 106-EP Estimated Tax Worksheet and Vouchers
• Schedule K-1 - Colorado Schedule K-1 Equivalent
• DR 158-N Payment Voucher for Extension of Time for Composite Return

Colorado Electronic Filing Election

Complete the federal Electronic Filing worksheet, State Electronic Filing section, Colorado fields to file the Colorado return electronically. An election can also be made on a global basis by making an entry in the Return Configuration Set in the Office Group.

If the return is disqualified from electronic filing, diagnostic messages will be issued informing you of the reason(s) for disqualification. If the diagnostic messages cannot be corrected (e.g. an exclusion from Colorado Electronic Filing) and electronic filing is still desired for the federal return, the entry for Colorado electronic filing must be removed.

Creating, Releasing and Transmitting the Colorado Electronic File

The Colorado electronic file is created, released and transmitted simultaneously with the federal electronic file. The Colorado file will be transmitted to the Treasury. Therefore, no additional steps are required during this stage of processing.

Colorado Acknowledgment

The presence of an electronically filed state return will be indicated by the appearance of the state's code "CO" in the State column of the Electronic Filing Status System.

Once the Treasury has retrieved the state tax data, an acknowledgment is issued indicating acceptance or rejection. If you are a service bureau customer, CCH Axcess Tax will notify you of these acknowledgments by mailing you a daily list of acknowledged returns. Remote entry and in-house customers may check on acknowledgments by looking at the Electronic Filing Status system. You may view this information when entering the Electronic Filing Status system in the State Date and State Status columns.

Colorado Signature Alternative

Colorado requires a signed DR 8453 be retained and should be attached as a PDF to the electronic file if feasible.

Balance Due Returns

A paper voucher may be used for a balance due return called the DR 0900. The voucher and payment should be mailed to:

Colorado Department of Revenue

Denver, CO 80261-0008

Important Information - Contact Information

CCH Axcess Tax

Electronic Filing Phone Support

Phone: 1-800-739-9998, option #5, option #1

Fax: 1-316-612-3405

Colorado Department of Revenue

Call Center for Colorado Taxes

Phone: (303) 238-7378

Self-Service: TaxColorado.com

State Refund Expectations

Colorado Department of Revenue is providing a URL and/or a statement about refund processing. Industry partners

must use this statement and/or URL or other method prescribed by the jurisdiction in all products. The messages must

be shown to end-users within the software in a way to maximize the likelihood the message is read.

url: https://www.colorado.gov/pacific/tax/refund

In the best interest of all our taxpayers, the Colorado Department of Revenue implements measures to detect and prevent

identity theft-related refund fraud. Fraud detection, along with verification that claims made on an individual income tax

return are valid and the documentation is submitted with the returns, are part of the process of ensuring the return is

correct and complete and that taxpayers receive the refund amount to which they are entitled. Please be aware that

Colorado’s fraud prevention measures, meant to ensure state tax dollars are going to the right person,

could delay individual income tax refunds up to 60 days beyond the time frames of prior years.