C.R.S. § 39-22-323

(1) An S corporation’s income attributable to the state shall, for the purposes of section 39-22-322 , be subject to the modifications provided in section 39-22-304 . (2) Each resident shareholder’s pro rata share of the S corporation’s income not attributable to the state shall, for the purposes of section 39-22-322 (2), be subject to the modifications provided in section 39-22-104 . (3) The character of any S corporation item taken into account by a shareholder of an S corporation pursuant to section 39-22-322 (2) shall be determined as if such item were received or incurred by the S corporation and not its shareholder.