42.30.104    FIDUCIARY - INCOME TAX LIABILITY DETERMINATION

(1) This rule applies to fiduciaries that are required to file a Montana Income Tax Return for Estates and Trusts (Form FID-3). If a fiduciary is required to file a different tax return for an estate or trust, then the tax will be determined on the required return. For example, if a fiduciary files a Montana Corporate Income Tax Return (Form CIT) for a business trust, then the tax liability for the business trust will be determined using Form CIT.

(2) Federal adjusted total income of the estate or trust is adjusted for Montana additions and subtractions as provided in (3) and 15-30-2152, MCA, to arrive at Montana adjusted total income.

(3) The Montana additions to federal adjusted total income of an estate or trust include, but are not limited to:

(a) recoveries of amounts claimed as deductions on a prior year's tax return that reduced Montana taxable income, such as a casualty loss reimbursement;

(b) health insurance premiums used to calculate the Insure Montana small business health insurance credit;

(c) expenses allocated to federal obligations that are not allowed as a deduction for Montana purposes; and

(d) other items properly included in Montana taxable income that are not included in federal taxable income, such as distributions to an estate from an employee's pension or retirement plan that are subject to Montana tax at the time of distribution.

(4) The Montana subtractions from federal adjusted total income of an estate or trust include, but are not limited to:

(a) state tax refunds included in federal taxable income. Montana income tax refunds and income tax refunds received from another state are not taxable to Montana;

(b) refund, credit, offset, or other recovery of an amount deducted in an earlier year that was included in federal taxable income but did not reduce Montana taxable income;

(c) pension or annuity income exempt from tax as provided in 15-30-2110, MCA;

(d) federal taxable Railroad Retirement Board Tier I and Tier II benefits; and

(e) deductible expenses allocated to other states' interest and mutual fund dividends such as expenses related to interest income from non-Montana municipal securities includable in Montana taxable income.

(5) Montana adjusted total income is reduced, but not below zero, by any Montana income distribution as determined in ARM 42.30.105.

(6) An estate or trust is allowed one personal exemption as provided in 15-30-2152, MCA.

(7) Resident estates and trusts pay tax on all of their income and are entitled to claim a credit for taxes paid to other states on the same income as provided in 15-30-2302, MCA, and ARM 42.4.401 through 42.4.404.

(8) Nonresident and part-year resident estates and trusts compute a tentative tax as if they are resident estates or trusts, and then determine their Montana income tax liability by multiplying the tentative tax by the ratio of their Montana source income to their income from all sources as provided in 15-30-2104, MCA.

(9) Nonresident estates and trusts cannot claim a credit for taxes paid to other states against their Montana income tax liability.

History: 15-1-201, 15-30-2104, 15-30-2620, MCA; IMP, 15-30-2104, 15-30-2110, 15-30-2151, 15-30-2152, 15-30-2153, 15-30-2603, MCA; NEW, 2016 MAR p. 22, Eff. 1/9/16.