Colorado source income?

[DrewEckhardt 0]

If a Delaware corporation with physical head quarters in Colorado paid me not to sue them for failing to change incentive stock options I earned while working in Colorado 2004-2006 and exercised there in 2006 to non-qualified options when they extended the exercise period (this made me liable for taxes on a penny per share worth of gains that I need to file amended returns on) and the settlement was made in 2008 when I was living in California is the payment "Colorado source income?"

I'd argue that the payment is a settlement for damages, and not income from

CRS 39-22-109(2)(a)(II)
A business, trade, profession, or occupation carried on in Colorado;

which is the only potentially relevant piece of law.

As a matter of principle when I have to file three additional tax returns over this little money I'm going to make the minor additional effort to avoid giving the governments a cent more than I'm legally obligated to.

On Monday I'll call the Colorado Department of Revenue and maybe the accountant I've "laid off" but I'm curious.