The Colorado Department of Revenue issued a private letter ruling concluding that a taxpayer’s income arising from the sale of Colorado real property is apportionable income because the property was used in the taxpayer property rental business. However, the proceeds from such sales are not “receipts” and thus not included in its Colorado apportionment factor calculation because the sale of the property did not occur in the regular course of the taxpayer’s business. The taxpayer received receipts in the regular course of its business from property rentals, and disposed of its real property only on infrequent occurrences. Thus, the Department concluded that proceeds for a sale of real property was apportionable income as it was “income arising from transactions and activity in the regular course of a taxpayer’s trade or business.” But, for purposes of determining the apportionment factor, receipts are included in the calculation only to the extent that they are “received from transactions and activity in the regular course of a taxpayer’s trade or business.” The taxpayer’s business is property rental, not property sales, and thus the Department determined that the receipts received from the disposition of the real property are not “receipts” for purposes of determining the taxpayer’s Colorado apportionment factor.
Colo. Dept. of Rev., PLR 23-002 (Mar. 13, 2023).