The enterprise zone investment tax credit is 3% of any qualified investment in section 38 property:

• acquired and placed in service or constructed during the tax year, and
• used exclusively (100%) in a Colorado enterprise zone for the first year of its ownership by the taxpayer.

Limitations
The credit is not computed on the full value of 3-year recovery property or on non-recovery property with a useful life of less than seven years. See "Qualified Investments" for details.

The enterprise zone investment tax credit with respect to any qualified investment is in lieu of any "old" investment tax credit otherwise allowed with respect to the same expenditure. [C.R.S. 39-22-507.5]

For income tax years beginning on or after January 1, 1997, except to the extent such relocation meets the criteria for an expansion as described in Section 39-22- 508.2 (2)(b) and (2)(c) C.R.S., no investment tax credit shall be allowed if the investment resulted from the relocation of a business operation from within the state to an enterprise zone. This is regardless of whether the original location of the operation was within an enterprise zone. [C.R.S. 39-30-104(6)] Expansion facilities are described in FYI Income 10 "Enterprise Zone New Business Facility Employee Credits."

Tax Liability Limitation
For years beginning on or after January 1, 1996, the credit is allowed to the extent of the first $5,000 of tax liability, plus 50 percent of the liability in excess of $5,000.

For tax years beginning prior to January 1, 1996, the Enterprise Zone Investment Tax Credit could be claimed to the extent of the first $5,000 of tax liability plus 25% of the liability in excess of $5,000.

If you have more ITC than you can claim based on the limits of your tax liability in a particular year, you can carry the unused amount of your ITC back three years and forward up to twelve years. (Seven years for credits earned in taxable years beginning prior to January 1, 1996.)

For more information see FYI Income 11. http://www.revenue.state.co.us/fyi/pdf/income11.pdf

Back