TAX NEWS - January 2010

Income/Franchise Tax - Montana: New and amended tax rules address composite returns, pass-through entities, and NOLs

New Rule I (ARM 42.9.204); Amended ARM 42.9.102 – 42.9.106; 42.9.202 – 42.9.203; 42.9.301; 42.9.401 – 42.9.402; 42.9.540, Mont. Dept. of Rev. (1/4/10). The department has issued a new rule to clarify the proper income tax treatment of a net operating loss (NOL) carryover and carryback with regard to shareholders and partners electing to be included in a composite return.

The tax department interprets state statutes to limit NOL carryover and carryback availability to the individual shareholders and partners at the time the composite return election is made, consistent with the application of other tax credits as they relate to composite return elections.

Another amended tax rule clarifies 2009 law [S.B. 260] that exempts publicly traded partnerships from certain composite return/withholding reporting and remitting requirements for tax years beginning after December 31, 2008, so long as they file a valid annual information return.