Colorado Does Not Completely Follow Fed On Tax Forms
Most of you know about Section 280E and the disallowed business expenses. Normally, Colorado taxes follow the Fed's rules. However, marijuana is where Colorado and the Feds diverge. Line 6 from Colorado's Form 106
For Colorado-licensed marijuana businesses, list any expenditure that is eligible to be claimed as a federal income tax deduction but is disallowed by section 280E of the Internal Revenue Code because marijuana is a controlled substance under federal law. To calculate this deduction, you must create pro forma federal schedule(s) for Business Profit or Loss as if the federal government would have allowed the expenditures from the marijuana business. The Colorado deduction shall be the difference between the profit/loss as calculated on the ACTUAL schedule(s) filed with the federal return and the pro forma schedule(s) described above. You must attach both the pro forma schedule(s) and the actual schedule(s) to your Colorado return to receive this deduction.
If you need help filing your marijuana tax forms for the IRS or Colorado, please contact us today.