How to enter Colorado PTE in ProConnect Tax

Down below we'll go over how to enter PTE for Colorado on Individual, Partnership, and S Corporate returns in ProConnect Tax.

SALT Parity Act Election

Beginning in tax year 2022, partnerships and S corporations may elect to be subject Colorado income tax at the entity level pursuant to the SALT Parity Act. The election is binding upon all partners or shareholders, regardless of whether the partner is an individual, corporation, or other legal entity. The election applies to, and Colorado tax must be paid with respect to, both resident and nonresident partners and shareholders.

Each partner or shareholder is allowed a credit against their Colorado income tax liability equal to the share of the tax imposed upon and paid by the entity with respect to the partner’s or shareholder’s income. All other credits are passed through to the partner or shareholder and must be claimed on a return filed by the partner or shareholder along with the refundable SALT Parity Act credit. When a partnership or S corporation makes the SALT Parity Act election, all partners or shareholders must add back any deduction taken under section 199A of the Internal Revenue Code.

Table of contents:

Individual

1. From the Input Return tab, go to State & Local ⮕ Other Credits ⮕ CO Credits.
2. Under the Colorado Refundable Credits section towards the bottom of the screen, enter the amount in the SALT parity tax credit field.

For e-file purposes, entries may be required to create an electronic copy of the CO DR 0106K. These entries can be made on:

• Partnership: Income ⮕ Passthrough K-1's ⮕ Partnership Info (1065 K-1) ⮕ State & Local ⮕ Colorado Form K-1 (EF Only)
  
• S Corporation: Income ⮕ Passthrough K-1's ⮕ S-Corp Info (1120S K-1) ⮕ State & Local ⮕ Colorado Form K-1 (EF Only)

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Partnership

1. From the Input Return tab, go to State & Local ⮕ Miscellaneous Information ⮕ CO Composite/SALT Parity Tax.
2. Under the Composite & SALT Parity (PTE) Income Tax Return section, check the box for SALT Parity Act/PTE election made for all qualifying partners.
   • This marks "If pass-through entity is electing to be subject to tax at the entity level under the SALT Parity Act (section 39-22-342, C.R.S.) for this tax year, mark this box" on page 1 of DR 0106, calculates tax on Part III of page 2, and the partners' share will be reported on Line 15 of the DR 0106K.

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S-Corporation

1. From the Input Return tab, go to State & Local ⮕ Miscellaneous ⮕ CO Miscellaneous.
2. Under the Composite & SALT Parity (PTE) Income Tax Return section, check the box for SALT Parity Act/PTE election made for all qualifying shareholders.
   • This marks "If pass-through entity is electing to be subject to tax at the entity level under the SALT Parity Act (section 39-22-342, C.R.S.) for this tax year, mark this box" on page 1 of DR 0106, calculates tax on Part III of page 2, and the shareholders' amount will be reported on Line 15 of the DR 0106K.

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