Montana Department of Revenue

Pass-Through Entity Delinquency Letters

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News and Updates

Pass-Through Entity Delinquency Letters

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We recently mailed delinquency letters to S corporations and partnerships who have an open account with us and have not filed their 2018 Montana tax return.
The delinquency letter project helps the department keep taxpayer accounts up-to-date. The letters also serve as a reminder for entities that may have forgotten to file or whose returns we did not receive.

We appreciate the time taxpayers and their representatives take to respond to these letters. Responding helps us not only ensure compliance, but also allows us to clean up unnecessary accounts and identify any system errors. If we do not receive a response from a taxpayer, we may estimate their tax, penalty and interest.

Entities that did not have any Montana activity for the tax year in question should file the Affidavit of Inactivity for Corporations, Partnerships, and Disregarded Entities (Form INA-CT) to report that they were not actively engaged in business during the tax year. Alternatively, an entity should file a final return to close their account with the department if they are withdrawing with the Secretary of State or do not anticipate any future Montana activity.

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Frequently Asked Questions

What types of business tax returns are required to be filed and when are they due?

Partnerships
Every business registered in the state that files a federal partnership return must file a Montana Partnership Information and Composite Tax Return (Form PR-1) reporting its activity in Montana. The return is filed on a calendar or fiscal year basis. The due date for the return is the 15th day of the third month following the tax period end.
S Corporations
Every business registered in the state that files a federal S Corporation return must file a Montana S Corporation Information and Composite Tax Return (Form CLT-4S) reporting its activity in Montana. The return is filed on a calendar or fiscal year basis. The due date for the return is the 15th day of the third month following the tax period end.

Where did the Department of Revenue obtain the registration information for the business?

You either previously filed a tax return with us or registered with the Montana Secretary of State. Businesses that conduct activity in the state must register with the Montana Secretary of State. The information recorded by this office is then forwarded to the Department of Revenue.

You can call the Office of the Secretary of State’s Business Services Division at (406) 444-3665 or visit their website at sosmt.gov if you have any questions or concerns regarding your business’ registration records.

What if the pass-through entity has not conducted any business in Montana for the tax periods referenced or is no longer active?

Partnerships and S corporations that registered to do business in Montana, but are not engaged in business in Montana, are required to file an
Affidavit of Inactivity for Corporations, Partnerships and Disregarded Entities (Form INA-CT) for the reporting period.

This form must be filed electronically through our TransAction Portal. If it is the final year of your business in Montana, please indicate this when you file.

If only a small amount of income (gain or loss) was reported on our Montana Schedule K-1, do we really have to file?

Yes.

An entity with Montana income (gain or loss) has a Montana filing requirement.

There is no minimum income threshold

If the tax returns for the years referenced in the letter were filed, what needs to be done?

Please send us the returns with copy clearly marked on them, along with a copy of the letter. If a payment was sent with the tax return, please include a copy of the canceled check (front and back). If you electronically filed the return, please provide the e-file confirmation or acceptance numbers.

Where should I send the returns or other information?

Please send all returns or other information to:

Montana Department of Revenue
PO Box 5805
Helena, MT 59604-5805

Charitable Contributions

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Many charitable contributions are eligible for deduction from your federal and state adjusted gross income.

If you itemize your deductions, donations made by December 31 to qualifying charities may reduce your 2019 taxable income and could help bring you a larger refund in 2020. If you claim the standard deduction on your federal income tax return, you may still claim itemized deductions on your Montana return and lower your Montana income taxes.

You must make the charitable contributions by the end of the calendar year to deduct those contributions for that tax year.

Donations could be cash, vehicles, other items, or financial securities. Just make sure you keep proof of the donations, including receipts, and that you’re giving to an organization approved by the IRS for tax-deductible donations.

More information on charities, including protecting yourself against common charity scams and fraudulent organizations, is available from the Montana Department of Justice.

More on Charitable Contributions

The charitable contributions allowed as a deduction in computing your net income for Montana income tax purposes are the same contributions allowed as a deduction for federal income tax purposes made during the year—with the following exceptions:

  • You can include your contributions made to the Montana Veterans’ Service Special Revenue Account or the Montana State Veterans’ Cemetery program, or the surcharge you paid for purchasing a Montana patriotic specialty license plate, as itemized deductions on your Montana income tax return even if they are not allowed as itemized deductions on your federal return.
  • When you apply the federal 60 percent, 50 percent, 30 percent and 20 percent contribution limitations, use your Montana Adjusted Gross Income instead of your Federal Adjusted Gross Income when you determine your contributions that are allowed.
  • Any portion of a contribution that you used to calculate your Qualified Endowment Tax Credit, your Innovative Educational Program Credit, or your Student Scholarship Organization Credit, cannot also be claimed as a contribution deduction. You can claim a charitable deduction for that portion of the contribution not used to calculate this credit.

In general, excess charitable contributions can be carried over five years.

You may deduct your contributions to the Child Abuse and Neglect Prevention Program. If you decide to use the checkoff provided on your Contributions, Penalties, and Interest Schedule, you may deduct this contribution on the same return.

Contributions are subject to the federal substantiation requirements.

See IRS Publications 526 and 561 for more information.

Please Note:

If you are filing on paper and making a non-cash contribution of over $500, include a copy of your federal Form 8283 with your return.

2019 Your Community Matters Curriculum Updates

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The Alcohol Education and Training Unit is rolling out the new Your Community Matters Train-the-Trainer Program. The program has been updated to provide better information and an improved experience for Montana’s alcohol servers and retailers.

We would like to invite all state trainers to join us at one of our sessions across the state to learn about the new program. Please register for one of the sessions below.

Curriculum Update
The Curriculum Update sessions are for experienced trainers looking to learn the new Your Community Matters materials and familiarize themselves with what is new in the program.
Train the Trainer
The Train the Trainer sessions are for new State Trainer approved applicants working to finish their qualifications and pass the trainer exam.

Your Community Matters Session Schedules

Glasgow, Montana —November 5-6, 2019

Curriculum Update

  • November 5, 2019—11:00 a.m.—2:00 p.m.
  • November 5, 2019—3:00 p.m.—6:00 p.m.

Train the Trainer

  • November 6, 2019—11:00 a.m.—7:00 p.m.

Kalispell, Montana—November 12-14, 2019

Curriculum Update

  • November 12, 2019—6:00 p.m.—9:00 p.m.
  • November 14, 2019—9:00 a.m.—12:00 p.m.

Train the Trainer

  • November 13, 2019—9:00 a.m.—5:00 p.m.

Billings, Montana—November 19-20, 2019

Curriculum Update

  • November 19, 2019—9:00 a.m.—12:00 p.m.
  • November 19, 2019—2:00 p.m.—5:00 p.m.

Train the Trainer

  • November 20, 2019—9:00 a.m.—5:00 p.m.

Butte, Montana—November 25—26, 2019

Curriculum Update

  • November 25, 2019—9:00 a.m.—12:00 p.m.
  • November 25, 2019—4:00 p.m.—7:00 p.m.

Train the Trainer

  • November 26, 2019—9:00 a.m.—5:00 p.m.

Bozeman, Montana—December 2—4, 2019

Curriculum Update

  • December 2, 2019—3:00 p.m.—6:00 p.m.
  • December 4, 2019—8:00 a.m.—11:00 p.m.

Train the Trainer

  • December 3, 2019—9:00 a.m.—5:00 p.m.

Missoula, Montana—December 4—5, 2019

Curriculum Update

  • December 4, 2019—5:00 p.m.—9:00 p.m.

Train the Trainer

  • December 5, 2019—9:00 a.m.—5:00 p.m.

Helena, Montana—December 16, 2019

Curriculum Update

  • December 16, 2019—12:00 p.m.—3:00 p.m.

Great Falls, Montana—December 17—19, 2019

Curriculum Update

  • December 17, 2019—5:00 p.m.—8:00 p.m.
  • December 19, 2019—9:00 a.m.—12:00 p.m.

Train the Trainer

  • December 18, 2019—9:00 a.m.—5:00 p.m.

Registration for the 2019 Your Community Matters Update Sessions has closed.
Please subscribe to receive updates.

Federal Tax Reform – 965 Income, GILTI, and FDII

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Montana Corporate Income Tax Treatment of International Tax Provisions under Tax Cuts and Jobs Act of 2017

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The Tax Cuts and Jobs Act (TCJA) was enacted on December 22, 2017. The TCJA, in part, makes significant changes to the taxation of foreign-sourced income earned by U.S. corporations and their foreign subsidiaries. The following provides guidance on the treatment for Montana Corporate Income Tax purposes of Internal Revenue Code (IRC) §§ 965 (deemed repatriation of foreign dividends); 951A and 250 (global intangible low-taxed income [GILTI] and the GILTI deduction); and 250 (Foreign-Derived Intangible Income [FDII]). This guidance applies to the 2017 and subsequent tax years.

Montana Corporate Income Tax Treatment of International Tax Provisions under Tax Cuts and Jobs Act of 2017 Memo Preview Image

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IRC §965 – Deemed Repatriation of Foreign Income

The TCJA requires a mandatory “deemed repatriation of deferred foreign earnings” as Subpart F income. IRC §965 requires certain foreign corporations to add to Subpart F income the greater of their accumulated post-1986 deferred foreign earnings and profits, and deficits of certain foreign corporations (IRC §965 Inclusion Income). These taxpayers are then able to deduct a portion of the IRC §965 Inclusion Income (IRC §965 Deduction). While the deemed repatriation is required to be reported in the 2017 tax year, a taxpayer may make a federal election to pay the liability over eight years. Corporations that have IRC §965 income must include an IRC §965 Transition Tax Statement (Transition Tax Statement) with their federal return.

All taxpayers must treat IRC §965 Inclusion Income as Subpart F income for Montana purposes and attach federal Form 965 (Transition Tax Statement) to their Montana return. Any §965 income recognized as IRC §78 gross up for federal purposes will also be recognized as §78 gross up income for Montana purposes.

Water's Edge Filers

Tax Year 2017

To properly reflect the §965 inclusion income on the Montana return for taxpayers who file on a water’s edge basis, add the total amount of income reported on line 1 of federal Form 965 on Montana Form CIT page 3, line 2i “other additions.” §15-31-325(4), MCA, allows a corresponding deduction as a foreign dividend deduction on Montana Form CIT, page 3, line 3g “other reductions” totaling 80% of the §965 inclusion income added back for Montana purposes.

However, if any of the §965 inclusion income included in “other additions” is received from subsidiaries included in the Montana water’s edge filing, such as those incorporated in tax haven countries listed in §15-31-322, MCA, a 100% deduction of the total amount of inclusion income related to these entities is allowed as an intercompany dividend elimination rather than 80%. This amount should be reported on page 3, line 3g “other reductions.”

Furthermore, if any of the §965 inclusion income included in “other additions” is received by 80/20 companies, a 100% deduction of the total amount of inclusion income related to these entities is allowed rather than 80% pursuant to §15-31-322, MCA. This amount should be reported on page 3, line 3g “other reductions.”

To properly reflect §78 gross up income related to the §965 income on the Montana return for taxpayers who file on a water’s edge basis, add the total amount of income reported on line 4a of the federal Form 965 on Montana Form CIT page 3, line 2i “other additions.” Pursuant to §15-31-325(5), MCA, a 100% corresponding deduction is allowed on Montana Form CIT, page 3, line 3g “other reductions” totaling the amount included in “other additions.”

Tax Year 2018

The §965 inclusion income is already properly reflected in federal taxable income, line 28 of federal Form 1120. The §965 inclusion income received by members of the Montana water’s edge group will not require a state addback. Pursuant to §15-31-325(4), MCA, a corresponding deduction is allowed as a foreign dividend deduction on Montana Form CIT, page 3, line 3g “other reductions” totaling 80% of the §965 inclusion income received by members of the Montana water’s edge group (figured without regard to any §78 gross up income). This deduction is allowed rather than the amount shown on federal Form 1120, Schedule C, line 15, column c. §78 gross up that is included in the calculation of §965 inclusion income must be removed from the §965 deduction allowable for Montana purposes, as the gross up deduction is calculated elsewhere as described below.

However, if any of the §965 inclusion income is received from subsidiaries included in the Montana water’s edge filing, such as those incorporated in tax haven countries listed in §15-31-322, MCA, a 100% deduction of the total amount of inclusion income related to these entities is allowed as an intercompany dividend elimination rather than 80%. This amount should be reported on page 3, line 3g “other reductions.”

Income of 80/20 companies is excluded from the calculation of Montana taxable income on Montana Form CIT, page 3, line 3e; consequently, §965 inclusion income, including any §78 gross up, received by an 80/20 company is already properly excluded so no deduction is allowed.

§78 gross up income related to the §965 income is already properly reflected in federal taxable income, line 28 of federal Form 1120. This gross up income received by members of the Montana water’s edge group will not require a state addback. Pursuant to §15-31-325(5), MCA, Montana water’s edge filers are allowed a deduction of 100%, but not more than 100%, of the §78 gross up that has been included in apportionable income. The §78 gross up related to §965 income is included in this allowable deduction. The total Montana gross up deduction should be reported on Montana Form CIT, page 3, line 3g “other reductions” totaling the amount included on federal Form 1120, Schedule C, line 18, column (a) that represents amounts received by members of the Montana water’s edge group.

Worldwide Filers

Tax Year 2017

To properly reflect the §965 inclusion income on the Montana return for taxpayers who file on a worldwide basis, add the total amount of income reported on line 1 of the federal Form 965 on Montana Form CIT page 3, line 2i “other additions.” A corresponding deduction is allowed as an intercompany dividend elimination on Montana Form CIT, page 3, line 3g “other reductions” totaling 100% of the §965 inclusion income added back for Montana purposes.

If any of the §965 inclusion income is received from subsidiaries that are not included in the Montana worldwide filing, see instructions for Limited Combination filers below.

To properly reflect §78 gross up income related to the §965 income on the Montana return for taxpayers who file on a worldwide basis, add the total amount of income reported on line 4a of the federal Form 965 on Montana Form CIT page 3, line 2i “other additions.” A 100% corresponding deduction is allowed on Montana Form CIT, page 3, line 3g “other reductions” totaling the amount included in “other additions.”

Tax Year 2018

The §965 inclusion income is already properly reflected in federal taxable income, line 28 of federal Form 1120. The §965 inclusion income received by members of the Montana worldwide group will not require a state addback. A corresponding deduction is allowed as an intercompany dividend elimination on Montana Form CIT, page 3, line 3g “other reductions” totaling 100% of the §965 inclusion income received from members of the Montana worldwide group (figured without regard to any §78 gross up income). This deduction is allowed rather than the amount shown on federal Form 1120, Schedule C, line 15, column c. §78 gross up that is included in the calculation of §965 inclusion income must be removed from the §965 deduction allowable for Montana purposes, as the gross up deduction is calculated elsewhere as described below.

§78 gross up income related to the §965 income is already properly reflected in federal taxable income, line 28 of federal Form 1120. This gross up income received by members of the Montana worldwide group will not require a state addback. A deduction is allowed to Montana taxpayers filing on a worldwide basis for 100%, but not more than 100%, of the §78 gross up that has been included in apportionable income. The §78 gross up related to §965 income is included in this allowable deduction. The total Montana gross up deduction should be reported on Montana Form CIT, page 3, line 3g “other reductions” totaling the amount included on federal Form 1120, Schedule C, line 18, column (a) that represents amounts received by members of the Montana worldwide group.

If any of the §965 inclusion income is received from subsidiaries that are not included in the Montana worldwide filing, see instructions for Limited Combination filers below.

Separate Company, Domestic or Limited Combination Filers

Tax Year 2017

To properly reflect the §965 inclusion income on the Montana return for taxpayers who file on a separate company, domestic or limited combination basis, add the total amount of income reported on line 1 of the federal Form 965 that was received by the entity or group of entities included in the Montana return. This amount should be reported on Montana Form CIT page 3, line 2i “other additions.” A corresponding deduction is allowed on Montana Form CIT, page 3, line 3g “other reductions” totaling only those amounts reported on line 3 of the federal Form 965 that are associated with the entity or group of entities included in the Montana return.

However, if any of the §965 inclusion income is received from subsidiaries that are included in the Montana limited combination filing, a 100% deduction of the total amount of inclusion income related to these entities is allowed as an intercompany dividend elimination rather than the amount reported on federal Form 965.

To properly reflect §78 gross up income related to the §965 income on the Montana return for taxpayers who file on a separate company, domestic or limited combination basis, add the total amount of income reported on line 4a of the federal Form 965 that is received by the entity or group of entities included in the Montana return, on Montana Form CIT page 3, line 2i “other additions.” A 100% corresponding deduction is allowed on Montana Form CIT, page 3, line 3g “other reductions” totaling the amount included in “other additions.”

Tax year 2018

The §965 inclusion income is already properly reflected in federal taxable income, line 28 of federal Form 1120. The §965 inclusion income will not require a state addback. A corresponding deduction is allowed on Montana Form CIT, page 3, line 3g “other reductions” totaling only those amounts reported on federal Form 1120, Schedule C, line 15, column (c) that are received from the entity or group of entities included in the Montana return (figured without regard to any §78 gross up income). This deduction is allowed rather than the amount shown on federal Form 1120, Schedule C, line 15, column c. §78 gross up that is included in the calculation of §965 inclusion income must be removed from the §965 deduction allowable for Montana purposes, as the gross up deduction is calculated elsewhere as described below.

However, if any of the §965 inclusion income is received from subsidiaries that are included in a Montana limited combination filing, a 100% deduction of the total amount of inclusion income related to these entities is allowed as an intercompany dividend elimination rather than the amount reported on federal Form 1120, Schedule C.

§78 gross up income related to the §965 income is already properly reflected in federal taxable income, line 28 of federal Form 1120. This gross up income will not require a state addback. A deduction is allowed to Montana taxpayers for 100%, but not more than 100%, of the §78 gross up that has been included in apportionable income. The §78 gross up related to §965 income is included in this allowable deduction. The total Montana gross up deduction should be reported on Montana Form CIT, page 3, line 3g “other reductions” totaling the amount included on federal Form 1120, Schedule C, line 18, column (a) that represents amounts received by the entity or group of entities included in the Montana return.

IRC §951A – Global Intangible Low-Taxed Income (GILTI) and IRC §250 GILTI deduction

Beginning with tax year 2018, the TCJA created this new category of foreign income under IRC §951A. GILTI requires the U.S. owner of a CFC to potentially include a portion of the CFC’s earnings in the U.S. owner’s federal taxable income. As deemed income to the U.S. owner, GILTI is comparable to Subpart F income. The TCJA also created a deduction related to the GILTI under IRC §250 (GILTI deduction).

For Montana Corporate Income Tax purposes, Montana considers GILTI a foreign dividend that is included in the owner’s federal taxable income. All taxpayers must attach federal Form 8992 (U.S. Shareholder Calculation of GILTI) and federal Form 8993 (§250 Deduction for FDII and GILTI) to their Montana return. Any GILTI recognized as IRC §78 gross up for federal purposes will also be recognized as §78 gross up income for Montana purposes.

Water's Edge Filers

Tax Year 2018

The GILTI is already properly reflected in federal taxable income, line 28 of federal Form 1120. No state addback is required. Pursuant to §15-31-325(4), MCA, a corresponding deduction is allowed as a foreign dividend deduction. The allowable deduction totals 80% of GILTI received by members of the Montana water’s edge group, figured without regard to any §78 gross up income included in the federal calculation. The deduction should be reported on Montana Form CIT, page 3, line 3g “other reductions.” This deduction is allowed rather than the amount shown on federal Form 1120, Form 8993, Part IV, line 9. §78 gross up that is included in the calculation of GILTI must be removed from the GILTI deduction allowable for Montana purposes, as the gross up deduction is calculated elsewhere as described below.

If any of the GILTI is received from subsidiaries included in the Montana water’s edge filing, such as those incorporated in tax haven countries listed in §15-31-322, MCA, a 100% deduction of the total amount of GILTI (figured without regard to any §78 gross up income included in the federal calculation) related to these entities is allowed as an intercompany dividend elimination rather than 80%. This amount should be reported on page 3, line 3g “other reductions.”

§78 gross up income related to GILTI is already properly reflected in federal taxable income, line 28 of federal Form 1120. This gross up income received by members of the Montana water’s edge group will not require a state addback. Pursuant to §15-31-325(5), MCA, Montana water’s edge filers are allowed a deduction of 100%, but not more than 100%, of the §78 gross up that has been included in apportionable income. The §78 gross up related to GILTI is included in this allowable deduction. The total Montana gross up deduction should be reported on Montana Form CIT, page 3, line 3g “other reductions” totaling the amount included on federal Form 1120, Schedule C, line 18, column (a) that represents amounts received by members of the Montana water’s edge group.

Income of 80/20 companies is excluded from the calculation of Montana taxable income on Montana Form CIT, page 3, line 3e; consequently, any of the GILTI received, including §78 gross up associated with the GILTI, by an 80/20 company is already properly excluded so no deduction is allowed.

Worldwide Filers

Tax Year 2018

The GILTI is already properly reflected in federal taxable income, line 28 of federal Form 1120. No state addback is required. A corresponding deduction is allowed as an intercompany dividend elimination. The allowable deduction totals 100% of GILTI received from members of the Montana worldwide group, figured without regard to any §78 gross up income included in the federal calculation. The deduction should be reported on Montana Form CIT, page 3, line 3g “other reductions.” This deduction is allowed rather than the amount shown on federal Form 1120, Form 8993, Part IV, line 9. §78 gross up that is included in the calculation of GILTI must be removed from the GILTI deduction allowable for Montana purposes, as the gross up deduction is calculated elsewhere as described below.

§78 gross up income related to GILTI is already properly reflected in federal taxable income, line 28 of federal Form 1120. This gross up income received by members of the Montana worldwide group will not require a state addback. Montana worldwide filers are allowed a deduction of 100%, but not more than 100%, of the §78 gross up that has been included in apportionable income. The §78 gross up related to GILTI is included in this allowable deduction. The total Montana gross up deduction should be reported on Montana Form CIT, page 3, line 3g “other reductions” totaling the amount included on federal Form 1120, Schedule C, line 18, column (a) that represents amounts received by members of the Montana worldwide group.

If any of the GILTI is received from subsidiaries that are not included in the Montana worldwide filing, see instructions for Limited Combination filers below.

Separate Company, Domestic or Limited Combination Filers

Tax Year 2018

The GILTI is already properly reflected in federal taxable income, line 28 of federal Form 1120. No state addback is required. A corresponding deduction is allowed on Montana Form CIT, page 3, line 3g “other reductions” totaling only those amounts reported on federal Form 1120, Form 8993, Part IV, line 9 (figured without regard to any §78 gross up income included in the federal calculation) associated with the entity or group of entities included in the Montana return. §78 gross up that is included in the calculation of GILTI must be removed from the GILTI deduction allowable for Montana purposes, as the gross up deduction is calculated elsewhere as described below.

However, if any of the GILTI is received from subsidiaries that are included in the Montana limited combination filing, a 100% deduction of the total amount of GILTI (figured without regard to any §78 gross up income) related to these entities would be allowed as an intercompany dividend elimination rather than the amount reported on federal Form 8993.

Any §78 gross up income related to GILTI received from the entity or group of entities included in the Montana return is already properly reflected in federal taxable income, line 28 of federal Form 1120. This gross up income will not require a state addback. Montana filers are allowed a deduction of 100%, but not more than 100%, of the §78 gross up that has been included in apportionable income. The §78 gross up related to GILTI is included in this allowable deduction. The total Montana gross up deduction should be reported on Montana Form CIT, page 3, line 3g “other reductions” totaling the amount included on federal Form 1120, Schedule C, line 18, column (a) that represents amounts received by the entity or group of entities included in the Montana return.

IRC §250 – Deduction for Foreign Derived Intangible Income (FDII)

For tax years beginning after December 31, 2017, the TCJA created this new deduction for corporations under IRC §250. The deduction relates to certain federal taxable income to which a special federal tax rate is intended to apply. FDII is not considered a foreign dividend for Montana Corporate Income Tax purposes. To claim a deduction for FDII, all taxpayers must attach federal Form 8993 (§250 Deduction for FDII and GILTI) to their Montana return.

Water's Edge Filers

Tax Year 2018

FDII is already properly reflected in federal taxable income, line 28 of federal Form 1120. A deduction is allowed on Montana Form CIT, page 3, line 3g “other reductions” totaling the amount reported on federal Form 1120, Form 8993, Part IV, line 8 (figured without regard to any §78 gross up income included in the federal calculation) that represents amounts related to those entities included in the Montana water’s edge group. §78 gross up that is included in the calculation of the §250 FDII deduction must be removed from the calculation for Montana purposes, as the gross up deduction is calculated elsewhere for Montana purposes as described below.

§78 gross up income related to FDII is already properly reflected in federal taxable income, line 28 of federal Form 1120. Pursuant to §15-31-325(5), MCA, Montana water’s edge filers are allowed a deduction of 100%, but not more than 100%, of the §78 gross up that has been included in apportionable income. The §78 gross up related to FDII is included in this allowable deduction. The total Montana gross up deduction should be reported on Montana Form CIT, page 3, line 3g “other reductions” totaling the amount included on federal Form 1120, Schedule C, line 18, column (a) that represents amounts received by members of the Montana water’s edge group.

If any of the federal FDII deduction is related to entities excluded from the Montana water’s edge group, such as an 80/20 company, the deduction from federal Form 1120, Form 8993, Part IV, line 8 attributable to these entities is not allowed, as the income related to these entities has already been excluded.

Worldwide Filers

Tax Year 2018

FDII is already properly reflected in federal taxable income, line 28 of federal Form 1120. A deduction is allowed on Montana Form CIT, page 3, line 3g “other reductions” totaling the amount reported on federal Form 1120, Form 8993, Part IV, line 8 (figured without regard to any §78 gross up income included in the federal calculation) that represents amounts related to those entities included in the Montana worldwide group. §78 gross up that is included in the calculation of the §250 FDII deduction must be removed from the calculation for Montana purposes, as the gross up deduction is calculated elsewhere for Montana purposes as described below.

§78 gross up income related to FDII is already properly reflected in federal taxable income, line 28 of federal Form 1120. Montana worldwide filers are allowed a deduction of 100%, but not more than 100%, of the §78 gross up that has been included in apportionable income. The §78 gross up related to FDII is included in this allowable deduction. The total Montana gross up deduction should be reported on Montana Form CIT, page 3, line 3g “other reductions” totaling the amount included on federal Form 1120, Schedule C, line 18, column (a) that represents amounts received by members of the Montana worldwide group.

If any of the federal FDII deduction is related to entities excluded from the Montana worldwide filing, see instructions for Limited Combination filers below.

Separate Company, Domestic or Limited Combination Filers

Tax Year 2018

FDII is already properly reflected in federal taxable income, line 28 of federal Form 1120. A deduction is allowed on Montana Form CIT, page 3, line 3g “other reductions” totaling only those amounts reported on federal Form 1120, Form 8993, Part IV, line 8 (figured without regard to any §78 gross up income included in the federal calculation) that represents amounts related to the entity or group of entities included in the Montana return. §78 gross up that is included in the calculation of the §250 FDII deduction must be removed from the calculation for Montana purposes, as the gross up deduction is calculated elsewhere for Montana purposes as described below.

§78 gross up income related to FDII is already properly reflected in federal taxable income, line 28 of federal Form 1120. Montana filers are allowed a deduction of 100%, but not more than 100%, of the §78 gross up that has been included in apportionable income. The §78 gross up related to FDII is included in this allowable deduction. The Montana total gross up deduction should be reported on Montana Form CIT, page 3, line 3g “other reductions” totaling the amount included on federal Form 1120, Schedule C, line 18, column (a) that represents amounts received by the entity or group of entities included in the Montana return.

If any of the federal FDII deduction is related to entities excluded from the Montana domestic or limited combination filing, the deduction from federal Form 1120, Form 8993, Part IV, line 8 attributable to these entities is not allowed, as the income related to these entities has already been excluded.

My Revenue Wins National Award

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At the Montana Department of Revenue, we work hard to make things easy for Montanans. And we’re getting national notice—Montana’s My Revenue app has earned nationwide recognition with the 2019 Government Experience Award from the Center for Digital Government (CDG).

My Revenue has made streamlined and simplified scores of department interactions for the public. Over 140,000 people used its simple, intuitive interface last year, making more than $500,000 in payments through the app and saving Montana taxpayers thousands of dollars in the costs of printing and processing paper forms.

Just 10 websites in state government across the nation got the honor.

Congrats to our Department of revenue team, Carol Schopfer, Bill Jarocki, Matt Brotherton, and former staffers Wendy Brown, Patrick Miller, and Tarek Haffar.

New for Tax Year 2019: Montana Pass-Through Entity Tax Return (Form PTE)

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Beginning with Tax Year 2019, Partnerships and S corporations will file their Montana tax return on the new Montana Pass-Through Entity Tax Return (Form PTE).

Disregarded entities owned by partnerships and S corporations, including subchapter S subsidiaries, will be included on Form PTE.

The Montana S Corporation Information and Composite Tax Return (Form CLT-4S) and the Montana Partnership Information and Composite Tax Return (Form PR-1) have been discontinued.

For all tax years beginning before December 31, 2018, please continue to use the current forms:

Partnerships
Partnership Information and Composite Tax Return (Form PR-1)
S Corporations
S Corporation Information and Composite Tax Return (Form CLT-4S)
Disregarded Enities
Disregarded Entity Information Return (Form DER-1)
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