A partnership or S corporation is required to complete a Colorado K-1 (DR 0106K) for each partner or shareholder. The Department has made minor modifications to this form and various revisions for its instructions.
An “Excluded Nonresident” checkbox has been added to the Colorado K-1 to replace the checkbox for form DR 0108, which has been eliminated. The "Excluded Nonresident" box should be checked in two situations.
- If a partnership makes a SALT Parity Act election, the "Excluded Nonresident" box should be checked for any partner that is a C corporation that is unitary with the partnership, regardless of whether the C corporation is considered a Colorado resident. In this case, the C corporation is excluded from the computation of the tax at the partnership level.
- If a partnership or S corporation does not make a SALT Parity Act election, the "Excluded Nonresident" box should be checked for any partner that is a nonresident of Colorado and is a corporation, partnership, or exempt organization. That partner is excluded from the calculation of the composite tax the partnership must remit.
Additionally, partnerships and S corporations are generally no longer required to complete the Colorado column (Column B) of any Colorado K-1 prepared for a resident partner or shareholder. Partnerships should generally also leave lines 1 through 13 in Column B blank for all partners that are corporations or partnerships, unless the partnership made a SALT Parity Act election.