Administrative Rules of Montana
Department 42 - REVENUE
Chapter 42.30 - TAXATION OF ESTATES AND TRUSTS
Subchapter 42.30.1 - General Provisions
Rule 42.30.105 - FIDUCIARY - MONTANA DISTRIBUTABLE NET INCOME AND MONTANA INCOME DISTRIBUTION DEDUCTION - CHARACTER
Current through Register Vol. 6, March 22, 2024
(1) Montana distributable net income (DNI) limits the deduction that a decedent's estate or trust may claim for aggregate distributions to beneficiaries and determines how much of the distribution has to be included in the beneficiaries' gross income.
(2) Montana DNI is computed in the same way distributable net income is computed for federal income tax purposes under Internal Revenue Code section 643, but with Montana adjustments to income as provided in 15-30-2152, MCA, and [NEW RULE IV].
(3) Decedent's estates and trusts are allowed to deduct the lesser of:
(4) If a decedent's estate or trust elects for federal income tax purposes to treat distributions made within 65 days after the end of the tax year as having been made in the tax year, the decedent's estate or trust must also treat the distributions as having been made in the tax year for Montana income tax purposes.
(5) Income distributed to a beneficiary from a decedent's estate or trust retains the same character in the hands of the beneficiary as it had in the hands of the decedent's estate or trust, with the exception of unused capital loss distributed upon closure of the decedent's estate or trust to a corporation, which is treated as a short-term loss regardless of its character in the decedent's estate or trust.
(6) Unless the will or trust instrument specifically provides otherwise, a distribution to beneficiaries is considered to be a proportionate distribution of the different kinds of income composing the Montana DNI of the estate or trust. The same character and proportionate distribution rule is illustrated by the following example:
DNI |
|
Interest Income |
$10,000 |
Dividend Income |
$ 5,000 |
Net Montana Farm Income |
$35,000 |
Total |
$50,000 |
Beneficiary B |
Beneficiary C |
|||
Interest Income |
$ 2,500 |
Interest Income |
$ 2,500 |
|
Dividend Income |
$ 1,250 |
Dividends |
$ 1,250 |
|
Farm Income |
$ 8,750 |
Farm Income |
$ 8,750 |
|
Total |
$12,500 |
Total |
$12,500 |