Toncray v. Dolan

The appellees-taxpayers are shareholders of Westland Theatres, Inc., a Colorado corporation, which has elected to be taxed under Sub-chapter S of the Internal Revenue Code, sections 1371-1379. Pursuant to C.R.C.P. 57, and sections 13-51-101, et seq., C.R.S. 1973, the taxpayers sought, in the El Paso County District Court, a declaratory judgment that the Colorado Department of Revenue’s regulation 138-1-6 is invalid as inconsistent with the surtax statute, section 39-22-106(1), C.R.S. 1973. Regulation 138-1-6 purports to apply the Colorado surtax to the undistributed taxable income of…