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Montana Additions – Codes
|AA||Interest and mutual fund dividend income that the entity received from bonds and obligations of another state, territory or political subdivision of another state (county, municipality, district, etc.)|
|AB||State, local and foreign income taxes based on income or profits|
|AC||Taxes paid by the S corporation on its federal Form 1120S that resulted in a reduction of federal taxable income (e.g., built-in gains tax)|
To the extent that a Montana subtraction for business deduction you claimed on one of your previous Montana returns reduced the amount of your Montana income tax liability, any subsequent refund of the amount
|AE||Addition for Dependent Care Assistance Credit adjustment:
If you claimed business expenses for providing dependent care assistance and now are claiming the Montana Dependent Care Assistance Credits on behalf of your owners, you must add the amount of the dependent care assistance expenses used to calculate your Montana Dependent Care Assistance credits on Montana Form DCAC as an addition.
|AF||Farm and Ranch Risk Management Account taxable distributions:
If you are a family farm corporation, a distribution from your Montana Farm and Ranch Risk Management Account is taxable in either of the following situations:
|AG||Title plant depreciation and amortization:
If you are taking a federal deduction for depreciation and amortization on a title plant, you must add back to your Federal Adjusted Gross Income the amount of this depreciation and amortization when you determine your Montana Adjusted Gross Income.
Any other additions to income that must be included for Montana tax purposes.
Montana Subtraction Codes
Do not include separately stated deductions that are subject to an election or limitation on a partner’s income tax return (e.g., depletion from oil and gas).
|SA||Interest on United States government obligations and mutual fund dividends attributable to that interest:
The entity can subtract these amounts from total federal income as long as they are included on Form PTE, line 12. Interest on obligations that are only guaranteed by the United States government is not tax exempt. If the entity received interest or mutual fund dividends attributable to Government National Mortgage Association (Ginnie Mae) bonds, Federal National Mortgage Association (Fannie Mae) bonds or Federal Home Loan Mortgage Corporation (FHLMAC) securities, a pass-through entity cannot subtract the interest or mutual fund dividends.
United States obligations that are exempt include:
Series E, EE, F, G and H savings bonds
Refer to a pass-through entity’s federal Form 1099-DIV to determine what percentage of the dividends qualify for an exemption from Montana individual income tax.
|SB||Business-related expenses for purchasing recycled material:
Deduct an additional amount equal to 10% of the expenditures for the purchase of qualified recycled material that was otherwise deductible as business-related expenses in Montana, as computed on Montana Form RCYL, Part V. Form RCYL must be included with the tax return if the entity files a paper return. If the entity files electronically, the entity represents that it has a copy in its records.
|SC||Business expenses not deducted due to an existing federal credit:
If you incurred a business expense which was disallowed because you claimed a federal credit, you can deduct this business expense for Montana tax purposes. This subtraction includes wages deduction reduced by federal targeted jobs credit or the credit for the portion of employer Social Security taxes paid with respect to employee cash tips.
Do not include any recoveries of capital expenditures through depreciation, depletion and amortization. Depreciation, depletion or amortization deductions must be the same for federal and Montana income tax purposes.
|SD||Certain expenses incurred by medical marijuana providers:
If you are a medical marijuana provider registered in the state of Montana, you can subtract on this line your ordinary and necessary business expenses typically disallowed under IRC 280E.
Under IRC 280E, providers are generally not allowed a deduction on their federal return for business expenses associated with the production and sale of marijuana other than those directly related to the cost of manufacturing the
|SE||Sales of Land to Beginning Farmers:
You can subtract 100 percent of your income or capital gain (up to a maximum of $50,000) that you recognized from the sale of at least 80 acres or more of land to a beginning farmer at 9 percent or less interest on a long-term contract. To qualify for this deduction, you need to apply to and be approved by the Agricultural Loan Authority of the Montana Department of Agriculture. You need to include a copy of this approval with your individual income tax return.
Learn more about the Montana Beginning Farm or Ranch Loan Program.
|SF||Capital gains from SBICs:
If you have capital gains or dividend income from an investment in a small business investment company (SBIC) included in your Federal Adjusted Gross Income, you can exempt these capital gains or dividends if all of the following conditions are met:
|SG||Certain gains recognized by a liquidating corporation:
You can subtract that portion of your gain from the liquidation of a reporting corporation to the extent that this gain is included in the gross income of the liquidating corporation’s Montana corporate income tax return from your Federal Adjusted Gross Income.
|SH||Farm and Ranch Risk Management Account deposits:
You can subtract any deposits you made into a Farm and Ranch Risk Management Account equal to the lesser of 20 percent of the net income that is attributable to your agricultural business or $20,000. This account is designed to be used as a risk management tool for your individual or family farm corporation’s agricultural business. It is established as a Montana trust with your financial institution as the trustee.
Amounts that you contributed to your Farm and Ranch Risk Management Account that were excluded from your Montana Adjusted Gross Income in prior years are taxable to you and should be included in your Montana Adjusted Gross Income when you distribute your funds. Amounts that you contributed to your Farm and Ranch Risk Management Account that are not distributed before the last business day on the fifth year from the date that this contribution was deposited are considered distributed and are assessed a 10 percent penalty on the amount of tax resulting from the Farm and Ranch Risk Management Account principal.
For further instructions about the Montana Farm and Ranch Risk Management Account, see Montana Form FRM. When you claim this exclusion, include a copy of Form FRM with your Montana tax return.
|SI||Donation of mineral exploration information to the Montana Tech Foundation:
If you received a Montana Schedule K-1 showing a deduction, or you incurred the expense yourself, for the donation of mineral exploration information to the Montana Tech Foundation within the limitations of 15-32-510, MCA, you can subtract the amount on this line.
|SJ||Gain on eligible sale of mobile home park:
If you were the owner of a mobile home park and you sold the park to a tenants’ or mobile home park residents’ association, a 501(c)(3) organization or a county or municipal housing authority, you may be able to subtract all or a portion of the gain you recognized. Complete Montana Form MHPE to determine the amount of the exclusion.
|SK||Contributions made by a small business to its independent liability fund. (33-27-117, MCA)|
|SL||Portion of an investment made in a building for the purpose of conserving energy:
To qualify, the building has to be used in a pass-through entity’s business and the result of the investment must be a substantial reduction in the amount of energy needed to render the building usable. See 15-32-103, MCA.