Colorado Department of Revenue v. Cray Computer Corp.

I. INTRODUCTION

This appeal requires us to construe the sales tax exemption under the "Urban and Rural Enterprise Zone Act," 1 for the purchase of used machinery for use in an enterprise zone. We hold that a taxpayer may receive an exemption for only $150,000 of the purchase price.

We briefly explain a few basic tax terms and concepts that are central to this dispute. In this case we determine whether the enterprise zone sales tax exemption 2 incorporates the investment tax credit (ITC) limitation of $150,000 on purchases of used business prop-erty. 3 This issue requires an elementary…