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Private Contributions
Colorado Department of Revenue, Taxpayer Service Division
Private Contributions
Tax Credit for Contributions
to Enterprise Zone Administrators, Programs, Projects or Organizations
(Revised 09/99)
General Information
For income tax years beginning on or after Jan. 1, 1996, any taxpayer who makes monetary or in-kind contributions to an enterprise zone administrator or to an agent designated by the enterprise zone administrator for the purpose of implementing the economic development plan of the enterprise zone may claim an income tax credit of 25 percent of the value of the contribution up to a maximum credit of $100,000. For income tax years beginning prior to Jan. 1, 1996, the credit was 50 percent of the value of the contribution. [§39-30-103.5 (1) C.R.S.]
Exceptions
The 50 percent credit will be allowed for tax years beginning on or after Jan. 1, 1996 for:
- contributions made prior to July 1, 1997 to or for the benefit of a recipient certified in writing by the zone administrator prior to May 1, 1996 as a qualified funds recipient; or
- 2contributions made prior to Jan. 1, 2001 to or for the benefit of a recipient certified in writing by the zone administrator prior to May 1, 1996 as a qualified funds recipient in accordance with a written agreement between the donor and the zone administrator executed prior to July 1, 1997.
Under the terms of Senate Bill 96-193, information about taxpayer contributions and their effect on Colorado income tax liabilities may be subject to release to the public [§39-30-103.5(7) C.R.S.]
Eligible Purposes
To qualify for the credit, the contribution must be used for purposes that are directly related to job creation, job preservation, child care programs, or assistance programs for homeless persons.
Child Care Programs
For income tax years beginning prior to Jan. 1, 1999, contributions made for the purpose of promoting child care within an enterprise zone qualify for the credit. Such contributions may be for the purpose of
- establishing a child care facility in an enterprise zone;
- establishing a fund for making grants or loans to parents residing or employed in an enterprise zone who need assistance in paying for child care;
- the expense of training child care providers; or
- establishing child care information dissemination or referral programs within a zone.
Contributions made for promoting child care for income tax years beginning on or after Jan. 1, 1999 will qualify for this credit only to the extent they were included in a pledge agreement certified prior to July 1, 1997.
Assistance for Homeless Persons
Contributions to promote temporary, emergency or transitional housing programs for the homeless that offer or provide referrals to child care, job placement and counseling services for the purpose of promoting employment for homeless persons in enterprise zones qualify for the credit. [§39-30-103.5 (3) C.R.S.]
Credits in General
No credit shall be allowed to a taxpayer for any contributions which are used for a purpose that directly benefits the contributor. [§39-30-103.5 (4) C.R.S.]
Examples of in-kind contributions would include employee labor, materials, desks, computer equipment, or stock.
Credit claims must be accompanied by a certificate from the enterprise zone administrator attesting to the value of the contribution and the use to which it will be put. For any given year, the amount of the credit is limited to the taxpayer's liability. Any excess credit may be carried forward for a period of up to five years. [Reg. 39-30-103.5] The $100,000 credit limit can be generated each year whether or not there is any carryover from prior years.
Your certification forms (Form DR 0075) will specify the amount of your contributions that qualify for the 50 percent cash/25 percent in-kind credit and the amount of your contributions that qualify for the 25 percent cash/12 1/2 percent in-kind credit.
Example (50 percent limitation credit): The Brown Company contributed $10,000 in cash to enterprise zone A during 1993. The company also contributed $50,000 in office equipment and employee labor during 1993. The total contribution was $60,000 and the basic limitation is 50 percent of that amount or $30,000. But since the credit for the in-kind contribution cannot exceed 50 percent of the basic limitation, the allowable credit is $15,000 for in-kind contributions and $10,000 for cash contributions for a total allowable credit of $25,000. [There is no specific limit on the cash portion of a combined contribution. Therefore, cash credits are allowed at 100 percent as long as the allowable credit (in this case, $25,000) does not exceed the basic $30,000 limitation.] If the Brown Company's tax for 1993 was $17,000, it could claim a $17,000 credit and carry the $8,000 excess credit forward to 1994.
Example (25 percent limitation credit): The New Company contributes $50,000 cash to a child care center development in an enterprise zone on 8/1/97. The New Company derives no direct benefit from its contribution. For example, the center will not be located on or attached to a New Company facility. New Company does not sell or lease anything to the center and New Company employees receive no reduced rates for child care.
Because no agreement existed prior to July 1, 1997 enabling the 50 percent credit, the 25 percent credit applies and New Company earns a $12,500 credit. If New Company's Colorado income tax liability for 1997 is $10,000, New Company claims $10,000 of the credit and carries $2,500 forward to 1998.
Had the child care center project been certified by its zone administrator prior to 5/1/96, a New Company contribution before 7/1/97 would qualify for a $25,000 (50%) credit.
OR, if the New Company obtained the agreement of the zone administrator on June 30, 1997, pledging a $50,000 contribution to the child care center project which was certified as a qualified contribution recipient prior to 5/1/96, then the contribution of $50,000 on August 1, 1997 would qualify for a $25,000 (50%) credit.
In-Kind Contributions
The credit for in-kind contributions may not exceed 50 percent of the otherwise allowable credit. This means that the amount of the credit for in-kind contributions alone is 25* percent of the value of the contribution, up to a maximum credit of $50,000. For cash and in-kind contributions, the credit is the lowest of the three following amounts: [Reg. 39-30-103.5 CR.S.]
- a basic limitation of 50* percent of the combined value of cash plus in-kind contributions; or
- 100 percent of the cash
portion of the contribution plus the smaller of
- 25* percent of the combined value of the cash and in-kind contribution or
- $50,000; or
- $100,000.
* For contributions that do not qualify for the 50 percent credit substitute 12.5 percent for 25 percent and 25 percent for 50 percent.
Contribution Credit Computation Schedule
STEP 1. Compute the credit for the contributions that qualify for the 50 percent limitation credit.
1) Amount of cash contributions. $___________________
2) Value of in-kind contributions. $___________________
3) Total of lines 1 and 2. $___________________
4) Smaller of $100,000 or 50 percent of line 3. $___________________
5) Limitation on the in-kind credit, 50 percent of line 4. $___________________
6) Allowable in-kind credit, smaller of lines 2 or 5. $___________________
7) Limitation on cash credit, line 4 minus line 6. $___________________
8) Allowable cash credit, smaller of line 1 or line 7. $___________________
9) Total credit, line 6 plus line 8. $___________________
STEP 2. Compute the credit for the contributions that qualify for the 25 percent limitation credit.
1) Amount of cash contributions. $___________________
2) Value of in-kind contributions. $___________________
3) Total of lines 1 and 2. $___________________
4) Smaller of $100,000 minus the amount on line 9, STEP 1; or 25 percent of line 3. $___________________
5) Limitation on in-kind credit, 50 percent of line 4. $___________________
6) Allowable in-kind credit, smaller of lines 2 or 5. $___________________
7) Limitation on cash credit, line 4 minus line 6. $___________________
8) Allowable cash credit, smaller of line 1 (plus the excess, if any, of line 1, STEP 1 over line 8, STEP 1); or line 7. $___________________
9) Total credit, line 6 plus line 8. $___________________
If line 1, STEP 2 exceeds line 8, STEP 2, you may add the excess to the line 1 amount entered on line 8 of STEP 1 and recompute your STEP 1 credit. (Line 8, STEP 1 is still limited to the amount on line 7, STEP 1.)
NOTE: Recomputing your STEP 1 credit may require you to recompute your STEP 2 credit because the limitation on line 4 of STEP 2 may change.
Your current year contribution credit will be the total of line 9, STEP 1, plus line 9, STEP 2, plus any contribution credit carryover you may have from prior years; except that your current year credit cannot exceed $100,000 or your tax liability remaining after any other credits you have claimed. Excess contribution credits may be carried forward for up to five years.
Further Information
For more information on related topics, consult the following DOR publications:
- FYI General 1 "Department of Revenue Publications";
- FYI General 6 "General Information About Colorado Enterprise Zones";
- FYI General 8 "The FYI Program - Index and General Information."
Other Colorado "FYI" Tax Publications
Colorado Tax Forms (commonly requested forms)
