BP America Production Co. v. Colorado Department of Revenue

T1 Colorado's "severance tax" statute levies a tax on income derived from the sale of natural gas extracted from Colorado. § 89-29-105(1)(a), C.R.S8. (2015). .In so doing, the statute permits taxpayers to deduct "any transportation, manufacturing, and processing costs" from revenue in valuing oil and gas resources for tax purposes. § 39-29-102@B8)(a), C.R.S8. (2015). The question before us is whether this section permits a deduction for the "cost of capital" associated with natural gas transportation and processing facilities. In general terms, the cost of capital is defined as the amount of…