Business and Nonbusiness Income
Regulation 39-22-303.5.1(a) 
(1)	Section 39-22-303.5(1)(a) defines "business income" as income arising from transactions and activity in the regular course of the taxpayer's trade or business and includes income from tangible and intangible property if the acquisition, management, and disposition of the property constitute integral parts of the taxpayer's regular trade or business operations. All income that arises from the conduct of trade or business operations of a taxpayer is business income.  The income of the taxpayer is business income unless clearly classifiable as nonbusiness income under the standards set forth in this regulation, under constitutional law or otherwise as explicitly provided by law.
(2)	The classification of income by the labels occasionally used, such as manufacturing income, compensation for services, sales income, interest, dividends, rents, royalties, gains, operating income, non-operating income, etc., is of no aid in determining whether income is business or nonbusiness income. Income of any type or class and from any source is business income if it arises from transactions and activity occurring in the regular course of a trade or business. Accordingly, the critical element in determining whether income is "business income" or "nonbusiness income" is the identification of the transactions and activities that are the elements of a particular trade or business. In general all transactions and activities of the taxpayer that are dependent upon or contribute to the operation of the taxpayer's economic enterprise as a whole constitute the taxpayer's trade or business and will be transactions and activity arising in the regular course of, and will constitute integral parts of, a trade or business. (See paragraph (3) of regulation 39-22-303.11(c) concerning the calculation of income when a taxpayer engages in more than one line of business.)
(3) 	Business and Nonbusiness Income: Application of Definitions.  The following are rules for determining whether particular income is business or nonbusiness income:
(a)    	Rents from real and tangible personal property. Rental income from real and tangible property is business income if the property with respect to which the rental income was received is used in the taxpayer's trade or business or is incidental thereto.
(b)    	Gains or losses from sales of assets. 
(i) 	Gain or loss from the sale, exchange or other disposition of real or tangible or intangible personal property constitutes business income if the property while owned by the taxpayer was used in the taxpayer's trade or business. However, if such property was utilized exclusively for the production of nonbusiness income the gain or loss will constitute nonbusiness income.  If the property was used both for the production of business income and nonbusiness income then the gain from the sale is business income.  If the property was held for sale after having been used for the production of business income, the gain or loss shall be business income.
(ii) 	Gain or loss from the sale, exchange or other disposition of property shall be included in business income if such property is actually used or is available for or capable of being used during the tax period in the regular course of the trade or business of the taxpayer. Gain or loss from the disposition of property held as reserves or standby facilities or property held as a reserve source of materials shall be included in business income. Gain or loss from the disposition of property or equipment under construction during the tax period shall be included in business income if such property was intended to be used in the regular course of the trade or business of the taxpayer. 
(c)   	Interest. Interest income is business income where the intangible with respect to which the interest was received arises out of, is used, or was created in the regular course of the taxpayer's trade or business operations or where the purpose for acquiring and holding the intangible is related to or incidental to such trade or business operations.
(d)    	Dividends. Dividends are business income where the stock with respect to which the dividends are received arises out of or was acquired in the regular course of the taxpayer's trade or business operations or where the purpose for acquiring and holding the stock is related to or incidental to such trade or business operations.
(e)    	Patent and copyright royalties. Patent and copyright royalties are business income where the patent or copyright with respect to which the royalties were received arises out of or was created in the regular course of the taxpayer's trade or business operations or where the purpose for acquiring and holding the patent or copyright is related to or incidental to such trade or business operations.
(4)	Proration of Deductions.
(a) 	In most cases an allowable deduction of a taxpayer will be applicable only to the business income arising from a particular trade or business or to a particular item of nonbusiness income. In some cases an allowable deduction may be applicable to the business incomes of more than one trade or business and/or to several items of nonbusiness income. In such cases the deduction shall be prorated among such trades or businesses and such items of nonbusiness income in a manner that fairly distributes the deduction among the classes of income to which it is applicable.
(b) Consistency and uniformity in reporting.
(i)    	Year-to-Year consistency. In filing returns with this state, if the taxpayer departs from or modifies the manner of prorating any such deduction used in returns for prior years, the taxpayer shall disclose in the return for the current year the nature and extent of the modifications.
(ii)    	State-to-State uniformity. If the returns or reports filed by a taxpayer with all states to which the taxpayer reports under this section, Article IV of the Multistate Tax Compact or the Uniform Division of Income for Tax Purposes Act are not uniform in the application or proration of any deduction then the taxpayer shall disclose in its return to this state the nature and extent of the variance or variances, except where such non-uniformity in reporting is a direct and necessary consequence of differences between the law of this state and the law of another state.

Other definitions
Regulation 39-22-303.5.1(b) 
	In addition to the definitions provided in §39-22-303.5 C.R.S., the following terms are defined or further defined as follows:
(1) 	"Apportionment" refers to the division of business income among states by use of a formula containing apportionment factors.
(2) 	"Allocation" refers to the assignment of nonbusiness income to one or more particular states.
(3) 	"Business activity" refers to the transactions and activity occurring in the regular course of a particular trade or business of a taxpayer.
(4)	“Sales” – See regulation 39-22-303.5.4

Apportionment and allocation.
Regulation 39-22-303.5.3 
(1)  	Apportionment. If the business activity in respect to any trade or business of a taxpayer occurs both within and without this state, and if by reason of such business activity the taxpayer is taxable in another state, the portion of the net income (or net loss) arising from such trade or business that is derived from sources within this state shall be determined by apportionment in accordance with §39-22-303.5(4), C.R.S.
(2)	Allocation. Unless electing to treat all income as business income (see regulation 39-22-303.5.6), any taxpayer subject to the taxing jurisdiction of this state shall allocate all of its nonbusiness income or loss within or without this state in accordance with §39-22-303.5(5), C.R.S.
(3)	Combined Report. If a particular trade or business is carried on by a taxpayer and one or more affiliated corporations, nothing in these regulations shall preclude the use of a "combined report" whereby the entire business income of such trade or business is apportioned in accordance with §39-22-303, §39-22-303.5, or §39-22-303.7.  However, the income in the combined report may be required to be calculated pursuant to regulation 39-22-303.11(c), section (3) and pursuant to any applicable special regulations for allocation and apportionment of corporate income.
(4)	Consistency and Uniformity in Reporting. Year-to-Year consistency. In filing returns with this state, if the taxpayer departs from or modifies the manner in which income has been classified as business income or nonbusiness income, except for nonbusiness income with respect to which an election has been made pursuant to §39-22-303.5(6), C.R.S. in the returns for prior years, the taxpayer shall disclose in the return for the current year the nature and extent of the modification.
(5)	Taxable in Another State.
(a)	In general. Under §39-22-303.5(3)(b), C.R.S., the taxpayer is subject to the allocation and apportionment provisions of this section if it has income from business activity that is taxable both within and without this state. A taxpayer's income from business activity is taxable without this state if such taxpayer, by reason of such business activity (i.e., the transactions and activity occurring in the regular course of a particular trade or business), is taxable in another state within the meaning of §39-22-303.5(3)(c), C.R.S.
(b)	Applicable tests. A taxpayer is taxable within another state if it meets either one of two tests: (1) If by reason of business activity in another state the taxpayer is subject to one of the types of taxes specified in §39-22-303.5(3)(c)(I), C.R.S., namely: a net income tax, a franchise tax measured by net income, a franchise tax for the privilege of doing business, a corporate stock tax, or other similar tax; or (2) If by reason of such business activity another state has jurisdiction to subject the taxpayer to a net income tax, regardless of whether or not the state imposes such a tax on the taxpayer.
(c)	Producing nonbusiness income. A taxpayer is not taxable in another state with respect to a particular trade or business merely because the taxpayer conducts activities in such other state pertaining to the production of nonbusiness income or business activities relating to a separate trade or business.
(d)	A taxpayer is "subject to" one of the taxes specified in §39-22-303.5(3)(c)(I), C.R.S., if it carries on business activities in such state and such state imposes such a tax thereon. Any taxpayer that asserts that it is subject to one of the taxes specified in §39‑22‑303.5(3)(c)(I), C.R.S., in another state shall furnish to the executive director upon his or her request evidence to support such assertion. The executive director may request that such evidence include proof that the taxpayer has filed the requisite tax return in such other state and has paid any taxes imposed under the law of such other state; the taxpayer's failure to produce such proof may be taken into account in determining whether the taxpayer in fact is subject to one of the taxes specified in §39-22-303.5(3)(c)(I), C.R.S., in such other state.
(e)	Voluntary tax payment. If the taxpayer voluntarily files and pays one or more of such taxes when not required to do so by the laws of that state or pays a minimal fee for qualification, organization or for the privilege of doing business in that state, but
i.	does not actually engage in business activity in that state, or
ii.	does actually engage in some business activity, not sufficient for nexus, and the minimum tax bears no relation to the taxpayer's business activity within such state, 
	the taxpayer is not "subject to" one of the taxes specified within the meaning of §39-22-303.5(3)(c)(I), C.R.S.
(f)	Taxability. The concept of taxability in another state is based upon the premise that every state in which the taxpayer is engaged in business activity may impose an income tax even though every state does not do so. In states that do not, other types of taxes may be imposed as a substitute for an income tax. Therefore, only those taxes enumerated in §39-22-303.5(3)(c)(I), C.R.S. that may be considered as basically revenue raising rather than regulatory measures shall be considered in determining whether the taxpayer is "subject to" one of the taxes specified in §39-22-303.5(3)(c)(I), C.R.S. in another state.  By way of illustration and not of limitation, regulatory measures could include fees charged out-of-state cigarette and tobacco vendors for access to the state’s market or out-of-state alcoholic beverage vendors to ensure compliance with local liquor laws.
(g)	The second test, that of §39-22-303.5(3)(c)(II), C.R.S., applies if the taxpayer's business activity is sufficient to give the state jurisdiction to impose a net income tax by reason of such business activity under the Constitution and statutes of the United States. Jurisdiction to tax is not present where the state is prohibited from imposing the tax by reason of the provision of Public Law 86-272, 15 U.S.C.A., paragraphs 381-385. In the case of any "state" as defined in §39-22-303.5(1)(e) C.R.S. other than a state of the United States or political subdivision of such state, the determination of whether such "state" has jurisdiction to subject the taxpayer to a net income tax shall be made as though the jurisdictional standards applicable to a state of the United States applies in that "state". If jurisdiction is otherwise present, such "state" is not considered as without jurisdiction by reason of the provisions of a treaty between that state and the United States.

Calculation of sales factor
Regulation 39-22-303.5.4(a) 
(1)	In General. Section 39-22-303.5(1)(d), C.R.S. generally defines the term "sales" to mean all gross receipts of the taxpayer not allocated under subsection (5) of section 303.5, C.R.S.  Thus, except as otherwise specifically provided, for the purposes of the sales factor of the apportionment formula for each trade or business of the taxpayer, the term "sales" means all gross receipts derived by the taxpayer from transactions and activity in the regular course of such trade or business. The following are rules for determining "sales" in various situations:
(a)	In the case of a taxpayer engaged in manufacturing and selling or purchasing and reselling goods or products, "sales" includes all gross receipts from the sales of such goods or products (or other property of a kind that would properly be included in the inventory of the taxpayer if on hand at the close of the tax period) held by the taxpayer primarily for sale to customers in the ordinary course of its trade or business. Gross receipts for this purpose means gross sales less returns and allowances, and includes all interest income, service charges, carrying charges, or time-price differential charges incidental to such sales. Federal and state excise taxes (including sales taxes) shall be included as part of such receipts if such taxes are passed on to the buyer or included as part of the selling price of the product.
(b)	In the case of cost-plus-fixed fee contracts, such as the operation of a government-owned plant for a fee, "sales" includes the entire reimbursed cost, plus the fee.
(c)	In the case of a taxpayer engaged in providing services, such as the operation of an advertising agency, the performance of equipment service contracts, or research and development contracts, "sales" includes the gross receipts from the performance of such services including fees, commissions, and similar items.
(d)	In the case of a taxpayer engaged in renting real or tangible property, "sales" includes the gross receipts from the rental, lease, or licensing the use of the property.
(e)	In the case of a taxpayer engaged in the assignment, or licensing of intangible personal property such as patents and copyrights, "sales" includes the gross receipts therefrom.
(f)	In the case of a taxpayer engaged in the sale of intangible personal property, including patents and copyrights, "sales" means the gain therefrom.
(g)	If a taxpayer derives receipts from the sale of equipment used in its business, such receipts constitute "sales".
(h)	“Safe Harbor” lease income.  All income and deductions created by "safe harbor" lease transactions shall be included in the numerator of the Colorado sales factor only if the lessor's commercial domicile is located in Colorado. All income and deductions created by "safe harbor" lease transactions shall not be included in the numerator of the Colorado sales factor if the lessor's commercial domicile is not in Colorado.
(2)	Exceptions. In some cases certain gross receipts should be disregarded in determining the sales factor in order that the apportionment formula will operate fairly to apportion to this state the income of the taxpayer's trade or business.
(3)	Colorado destination sales of a corporation not having nexus in Colorado when such corporation is an includable member of an affiliated group of corporations. In the case of a corporation that does not have nexus (is not doing business) in Colorado even though it is an "includable corporation" in an affiliated group of unitary corporations filing a combined Colorado return, the sales of such corporation of property delivered to purchasers in Colorado shall not constitute Colorado sales for purposes of determining the sales factor.
(4)	Denominator. The denominator of the sales factor shall include the total sales derived by the taxpayer from transactions and activity in the regular course of its trade or business, except receipts excluded under §39-22-303.5(7)(b), C.R.S.
(5)	Numerator.  The numerator of the sales factor shall include sales attributable to this state and derived by the taxpayer from transactions and activity in the regular course of its trade or business. All interest income, service charges, carrying charges, or time-price differential charges incidental to such gross receipts shall be included regardless of (1) the place where the accounting records are maintained or (2) the location of the contract or other evidence of indebtedness.
(6)	Consistency and Uniformity in Reporting.
(a)	Numerator/denominator consistency.  In filing returns with this state, the taxpayer must use the same methodology in calculating both the numerator and the denominator of the sales factor.
(b)	Year-to-Year consistency. In filing returns with this state, if the taxpayer departs from or modifies the basis for excluding or including gross receipts in the sales factor used in returns for prior years, the taxpayer shall disclose in the return for the current year the nature and extent of the modification.
(c)	State-to-State uniformity. If the returns or reports filed by the taxpayer with all states to which the taxpayer reports under this section, Article IV of the Multistate Tax Compact or the Uniform Division of Income for Tax Purposes Act are not uniform in the inclusion or exclusion of gross receipts, then the taxpayer shall disclose in its return to this state the nature and extent of the variance or variances, except where such non-uniformity in reporting is a direct and necessary consequence of differences between the law of this state and the law of another state.

Sales of tangible personal property in this state
Regulation 39-22-303.5.4(b) 
(1)	Gross receipts from sales of tangible personal property are in this state:
(a)	if the property is delivered or shipped to a purchaser within this state regardless of the f.o.b. point or other condition of sale; or
(b)	if the property is shipped from an office, store, warehouse, factory, or other place of storage in this state and the taxpayer is not taxable in the state to which the property is shipped.
(2) 	Property shall be deemed to be delivered or shipped to a purchaser within this state if the recipient is located in this state, even though the property is ordered from outside this state.
(3) 	Property is delivered or shipped to a purchaser within this state if the shipment terminates in this state, even though the property is subsequently transferred by the purchaser to another state.
(4) 	The term "purchaser within this state" shall include the ultimate recipient of the property if the taxpayer in this state, at the designation of the purchaser, delivers to or has the property shipped to the ultimate recipient within this state.
(5) 	When property being shipped by a seller from the state of origin to a consignee in another state is diverted while en route to a purchaser in this state, the sales are in this state.
(6) 	If the taxpayer is not taxable in the state of the purchaser, the sale is attributed to this state if the property is shipped from an office, store, warehouse, factory, or other place of storage in this state.
(7) 	If a taxpayer whose salesperson operates from an office located in this state makes a sale to a purchaser in another state in which the taxpayer is not taxable and the property is shipped directly by a third party to the purchaser, the following rules apply:
(a) 	If the taxpayer is taxable in the state from which the third party ships the property, then the sale is in this state only if the third party ships the property from this state.
(b) 	If the taxpayer is not taxable in the state from which the property is shipped, then the sale is in this state.

Sales other than sales of tangible personal property in this state.
Regulation 39-22-303.5.4(c) 
(1) 	Gross receipts from services rendered are included in the Colorado sales factor numerator if the service that gave rise to the gross receipt is performed wholly within Colorado.  If the service is performed within and without Colorado, and except as otherwise provided by §39-22-303.7, C.R.S. or applicable special regulations for allocation and apportionment of corporate income or other regulation, the portion of the gross receipt included in the Colorado numerator is found by multiplying the gross receipt by a fraction, the numerator of which is the direct costs incurred in the performance of that service in Colorado and the denominator of which is the direct costs incurred in the performance of that service everywhere.
(a)	Direct costs include 
i.	wages of employees engaged in the performance of the service;
ii.	taxpayer’s payments to an agent or independent contractor for the performance of personal services on behalf of the taxpayer which give rise to the particular item of gross receipts;
iii.	a reasonable measure of the real and tangible-personal property used in the performance of the service.  Such reasonable measure could be a market lease rate, depreciation, or other reasonable method.  However, the same method must be used consistently from year to year and from state to state.
iv.	Services on Behalf of the Taxpayer. An activity giving rise to gross receipts performed on behalf of a taxpayer by an agent or independent contractor is attributed to this state if such activity giving rise to gross receipts is in this state.  In order to be included as a sale of the taxpayer in either the numerator or denominator of the sales factor, the activities described in this subparagraph iv must themselves directly give rise to gross receipts of the taxpayer.  By way of illustration and not of limitation, such costs could include, for an accounting firm, amounts paid to an independent contractor accountant whose time or activities directly relate to the accounting of the firm’s client and which time or activities directly give rise to a billing item presented to the firm’s client.  Such costs would not include, for the same firm, amounts paid to an independent contractor accountant whose services consist of accounting services related to the firm’s accounting, because these activities do not give rise to gross receipts of the taxpayer.
1.	Such activity giving rise to gross receipts is in this state:
a.	when the taxpayer can reasonably determine at the time of filing that the activity is actually performed in this state by the agent or independent contractor, but if the activity occurs in more than one state, the location where the activity is actually performed shall be deemed to be not reasonably determinable at the time of filing under this subparagraph (1)(a)(iv)(1)(a);
b.	if the taxpayer cannot reasonably determine at the time of filing where the activity is actually performed, when the contract between the taxpayer and the agent or independent contractor indicates it is to be performed in this state and the portion of the taxpayer’s payment to the agent or contractor associated with such performance is determinable under the contract;
c.	if it cannot be determined where the activity is actually performed and the agent or independent contractor's contract with the taxpayer does not indicate where it is to be performed, when the contract between the taxpayer and the taxpayer's customer indicates it is to be performed in this state and the portion of the taxpayer’s payment to the agent or contractor associated with such performance is determinable under the contract; or
d.	if it cannot be determined where the activity is actually performed and neither contract indicates where it is to be performed or the portion of the payment associated with such performance, when the domicile of the taxpayer’s customer is in this state. If the taxpayer’s customer is not an individual, “domicile” means commercial domicile.
2.	If the location of the activity giving rise to gross receipts by an agent or independent contractor, or the portion of the payment associated with such performance, cannot be determined under subparagraphs (1)(a)(iv)(1)(a) through (1)(a)(iv)(1)(c), or the taxpayer’s customer’s domicile cannot be determined under subparagraph (1)(a)(iv)(1)(d), or, although determinable, such activity is in a state in which the taxpayer is not taxable, such income producing activity shall be disregarded.
(b)	Direct costs do not include
i.	Overhead costs,
ii.	Management costs, unless such management was directly involved in the performance of the service, and
iii.	The costs of property not directly used in the performance of the service.
(2)	Rents and royalties from real property located in Colorado are included in the Colorado sales factor numerator.
(3)	Gross proceeds from the sale of real property located in Colorado are included in the Colorado sales factor numerator.
(4)	Interest and dividend income is included in the Colorado sales factor numerator if the taxpayer’s commercial domicile for that trade or business is located in Colorado.
(5)	Gain from the sale of intangible property is included in the Colorado sales factor numerator if the taxpayer’s commercial domicile for that trade or business is located in Colorado.
(6)	Patent and copyright royalties are included in the Colorado sales factor numerator if:
(a)	The patent or copyright is utilized by the payer in Colorado, or
(b)	The patent or copyright is utilized by the payer in a state in which the taxpayer is not taxable and the taxpayer’s commercial domicile for that trade or business is located in Colorado.
(7)	Revenue from the performance of purely personal services is included in the Colorado sales factor numerator if the income producing activity is performed in Colorado.
(a)	Purely personal services consist of services that are performed by individuals with only incidental contributions either from individuals not directly engaged in the performance of the service or from property.
(b)	Such services include, but are not limited to
i.	legal, accounting, or other professional services,
ii.	entertainment and sporting services.
(c)	In general, the performance of each individual is a separate income producing activity.  Where sales are generated by the performance of services of a number of individuals, such sales must be divided among the several individuals performing the services.  Such division must be reasonably related to the generation of the revenue.  The contributions of individuals whose services are not the direct object of the contract (such as para-professionals and support and administrative staff) are not considered income producing activities.  Their contributions are not considered in performing the calculation described in subparagraph (d) of this paragraph (7).  If the contributions of such personnel are more than incidental, then the activity is not a purely personal service and would be apportioned pursuant to 39-22-303.5(4)(c)(I), C.R.S.
(d) 	Each income producing activity is performed in Colorado to the extent that the individual is in Colorado when performing the service.  Thus, an income producing activity for the performance of purely personal services is in Colorado in the ratio of the time spent in Colorado in performing the service to the total time spent in performing the service.  Time spent in performing the service includes the amount of time expended in the performance of a contract or other obligation that gives rise to the revenue.  Personal service not directly connected with the performance of the contract or other obligation, as for example time expended in negotiating the contract, is excluded from the computation.

Non-business income
Regulation 39-22-303.5.5 
(1)	Reserved
(2)	Reserved
(3)	Reserved
(4)	Tangible personal property has a situs in Colorado at the time of the sale if it is physically located in Colorado immediately prior to the sale of the property.  The movement of property in anticipation of sale or as part of the sale transaction is not considered in determining its situs immediately prior to the time of sale.

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Election to treat non-business income as business income
Regulation 39-22-303.5.6  
(1)	Every year, taxpayers have an election to treat all non-business income as business income.  
	(a)	The election must be made with the original return on the appropriate departmental form filed prior to the extended due date of the return (the fifteenth day of the tenth month following the close of the tax year).  If no departmental form is available, the taxpayer may make the election on its own form in a clear and unequivocal manner filed together with the original return.  The taxpayer’s form must be clearly marked “Election to treat non-business income as business income for the tax year ending MM, YYYY” (enter the appropriate month and year in which the tax year for which the election is being made ends).
	(b)	Once the election has been filed for the year, it may not be changed, even if the extended due date for the year has not passed.
	(c)	The filing of a return without the election constitutes the non-exercise of the election for that tax year, even if the return is calculated with all income as business income.
(d)	The failure to file a return prior to the extended due date of the return constitutes the non-exercise of the election for that tax year. 
(2)	If the election described in this regulation is made for the income tax year, all sales of the taxpayer are included in the denominator and, if appropriate, the numerator of the taxpayer’s sales factor.

Regulation 39-22-303.5.7(a) 
	For regulations issued pursuant to § 39‑22‑303.5(7)(a),C.R.S., see Colorado Special Regulations for Allocation and Apportionment of Corporate Income 1 through 7 as follows:
(1)	Regulation 1 –	Airlines
(2)	Regulation 2 –	Contractors
(3)	Regulation 3 –	Publishing
(4)	Regulation 4 –	Railroads
(5)	Regulation 5 –	Television and Radio Broadcasting
(6)	Regulation 6 –	Trucking
(7)	Regulation 7 –	Financial institutions

Regulation 39-22-303.5.7(b)
(1)	Section 39-22-303.5(7)(b), C.R.S. permits a departure from the allocation and apportionment provisions of §39-22-303.5, C.R.S. (hereinafter “303.5”)  only in limited and specific cases.  Paragraph (7)(b) of 303.5 may be invoked only in specific cases where unusual fact situations (which ordinarily will be unique and nonrecurring) produce incongruous results under the apportionment and allocation provisions contained in section 303.5.
(2)	In the case of certain industries, the general regulations under section 303.5 in respect to the apportionment formula do not set forth appropriate procedures for determining the apportionment factors. Nothing in §39-22-303.5(7)(b), C.R.S. or in this regulation 39-22-303.5.7(b) shall preclude the executive director from establishing appropriate procedures under 303.5 and paragraph (7)(a) of 303.5 for determining the apportionment factors for each such industry, but such procedures shall be applied uniformly.
(3)	In the case of certain taxpayers, the general regulations under § 39-22-303, C.R.S. and 303.5 do not set forth appropriate procedures for determining income or the apportionment factors. Nothing in §39-22-303.5(7)(b), C.R.S. or in this regulation 39-22-303.5.7(b) shall preclude the executive director from distributing or allocating income and deductions under §39-22-303(6), C.R.S.
(4)	Special rules
(a)	Where substantial amounts of gross receipts arise from an incidental or occasional sale of a fixed asset used in the regular course of the taxpayer's trade or business, such gross receipts shall be excluded from the sales factor.
(b)	Insubstantial amounts of gross receipts arising from incidental or occasional transactions or activities may be excluded from the sales factor unless such exclusion would materially affect the amount of income apportioned to this state.
(c)	Where business income from intangible property cannot readily be attributed to any particular income-producing activity of the taxpayer, and such income cannot be assigned to the numerator of the sales factor for any state, such income shall be excluded from the denominator of the sales factor.
(d)	Where the income-producing activity in respect to business income from intangible personal property can be readily identified, such income is included in the denominator of the sales factor and, if the income-producing activity occurs in this state, in the numerator of the sales factor as well.

Income from foreclosures – limited in-state activity
Regulation 39-22-303.5.8
A taxpayer who qualifies under the provisions of §39-22-303.5(8), C.R.S. must file using the rules of that provision (direct allocation).  A taxpayer may not make an election pursuant to §39-22-303.5(6), C.R.S. to treat such income as business income.

Apportionment rules and regulations issued pursuant to Article IV of the Multistate Tax Compact
Regulation 39-22-303.5.9 
Apportionment rules and regulations issued pursuant to Article IV of the Multistate Tax Compact, § 24-60-1301, C.R.S., remain in effect for tax years beginning prior to January 1, 2009.  Those rules and regulations are not applicable with respect to tax years beginning on or after January 1, 2009, except as otherwise referred to in regulations effective for tax years on or after January 1, 2009.

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