42.30.202    TAX EXEMPT TRUSTS NOT CLASSIFIED AS CORPORATIONS

(1) If a trust is held for educational, charitable, or religious purposes and is not classified as a corporation under 15-31-101, MCA:

(a) Montana individual income tax is not imposed on the fiduciary or the beneficiaries; and

(b) corporate income tax is imposed only on the trust's unrelated business taxable income and must be paid by the fiduciary as provided in (4).

(2) Subject to (3), if a trust, that is not classified as a corporation under 15-31-101, MCA, is part of a stock-bonus, pension, or profit-sharing plan for the exclusive benefit of some or all of the employer's employees, and the employer and employee contributions and earnings are accumulated by the trust in accordance with the plan for distribution to the employees, then:

(a) Montana individual income tax is not imposed on the fiduciary or beneficiaries when the trust receives or accrues income;

(b) Montana individual income tax is imposed on the amount of employer contributions and all trust earnings distributed or made available to the distributee in the year distributed; and

(c) corporate income tax is imposed on the trust's unrelated business taxable income and must be paid by the fiduciary as provided in (3).

(3) An otherwise tax-exempt trust that has unrelated business taxable income (UBTI), as determined for federal income tax purposes, is subject to Montana corporate income tax and is required to file a Montana corporate income tax return reporting that income if the trust's federal UBTI tax liability for the tax year exceeds $100. To the extent the trust's UBTI is Montana source income, the trust is treated as having been engaged in business in Montana within the meaning of 15-31-101, MCA.

History: 15-1-201, 15-30-2104, MCA; IMP, 15-30-2151, 15-30-2152, 15-30-2153, 15-31-101, 15-31-102, MCA; NEW, 2016 MAR p. 22, Eff. 1/9/16.