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Colorado court finds holding company not subject to combination with operating affiliates

A Colorado district court has held that the Colorado Department of Revenue erred in requiring the inclusion of a holding company in a corporation’s combined corporate income tax returns because the holding company did not meet the definition of an includible C corporation under state law. To be considered an includible C corporation, more than 20% of the C corporation's property and payroll must be assigned to locations inside the United States. Because the holding company had no property or payroll of its own, it did not meet the more than 20% property and payroll test required to be an includible C corporation.

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