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Bill Detail: HB20-1024

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Title Net Operating Loss Deduction Modifications
Status Introduced In Senate - Assigned to Finance (02/28/2020)
Bill Subjects
  • Fiscal Policy & Taxes
House Sponsors A. Benavidez (D)
M. Snyder (D)
Senate Sponsors D. Moreno (D)
House Committee Finance
Senate Committee Finance
Date Introduced 01/08/2020
Description

Tax Expenditure Evaluation Interim Study Committee.
Colorado taxpayers can claim a net operating loss deduction on their
Colorado tax return. Unless statute otherwise provides, the state
deduction is currently allowed in the same manner that a similar
deduction is allowed under the internal revenue code to determine federal
taxable income.

Under current law, corporate taxpayers in Colorado are allowed to
carry forward their net operating loss deduction for the same number of
years as allowed for a federal net operating loss. For many years,
taxpayers were limited to a 20-year carryforward period for both state and
federal taxes. The federal Tax Cuts and Jobs Act (TCJA), enacted in
2017, allowed federal taxpayers unlimited years to carry forward net
operating losses. Because Colorado's statute specifies that net operating
losses may be carried forward for the same number of years as allowed
for a federal net operating loss, the TCJA's change resulted in the same
change to Colorado's law. The bill partially decouples the corporate net
operating loss deduction from the federal net operating loss deduction by
returning the state's carryforward period to 20 years.
The bill also repeals a state provision that was effective only for
financial institutions, so that, for purposes of the period of years a loss
can be carried forward, financial institutions will now be treated the same
as any other taxpayer.

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