Employee Ownership Tax Credit to Establish or Expand
CO-EOTC-ESTABLISH · Colorado
Summary
Tax credit equal to 75% of professional-service costs incurred to convert a Colorado-headquartered business to an employee-owned structure (or to expand an existing employee-owned structure by ≥20% equity). Structure-tiered cap: $150,000 for ESOPs, $40,000 for Worker-Owned Cooperatives and Employee Ownership Trusts, $25,000 for Alternative Equity Structures (LLC membership, phantom stock, profit interest, restricted stock, stock appreciation rights, stock options, synthetic equity). Staged-conversion top-up of $25,000 per additional ≥20%-equity stage. Eligible expenses: accounting, business valuation, legal, succession planning, technical assistance — must be approved by an unaffiliated CPA. Available for conversions completed 2022-01-01 through 2033-12-31. Pre-application + reservation REQUIRED before completing the conversion; 18 months from reservation to demonstrate ≥20% of costs incurred.
Benefit
- Percentage
- 75% of investment
- Flat
- —
- Duration
- —
- Max annual
- — (taxpayer)
- Max total
- $150,000 (taxpayer)
- Carryforward
- —
Program metadata
- Distribution
- allocated
- Claimant subject
- business
- Refund/transfer election
- refundable_only
- Program family
- —
- Effective
- —
- Sunset
- —
- Application deadline
- —
- Transfer discount
- —
Hard requirements (2)
- local_approval_requiredColorado Employee Ownership Office (OEDIT division) must issue a credit certificate. Pre-application + reservation REQUIRED before completing the conversion (ESTABLISH) or before the qualifying tax year (STRENGTHEN). DOR will not accept the credit without the certificate.
- min_existing_employeesBusiness must have at least 3 full-time employees (or 3 members if a cooperative) at the time of application.
Preference / tiering rules (0)
None.
NAICS industries (0)
Any.
Geo zones (1)
- statewide — · Colorado Statewide
Tags (7)
- pte_credit_schedule: DR_0106CR
- min_pct_employee_equity: 20
- eligible_window_start: 2022-01-01
- eligible_window_end: 2033-12-31
- eligible_structures: esop,worker_cooperative,employee_ownership_trust,llc_membership,phantom_stock,profit_interest,restricted_stock,sars,stock_options,synthetic_equity
- related_program_strengthen: CO-EOTC-STRENGTHEN
- individual_credit_schedule: DR_0104CR
Approval requirements (1)
- requiredCO OEDIT — Colorado Employee Ownership Office — Pre-application + reservation must be approved by the Colorado Employee Ownership Office (a division of OEDIT) before the conversion is completed (ESTABLISH) or before the qualifying tax year (STRENGTHEN). The credit certificate issued by this office must be attached to the income tax return — DR 0104CR (individual), DR 0105 Schedule G (estate/trust), DR 0106CR (PTE), or DR 0112 (C-corp).