2023 Montana Code Annotated › Title 15. Taxation › Chapter 30. Individual Income Tax › Part 23. Specific Tax Credits and Tax Checkoffs › 15-30-2327. Qualified endowments credit -- definitions -- rules

15-30-2327. Qualified endowments credit -- definitions -- rules.
(1) For the purposes of 15-30-2328 and this section, the following definitions apply:
(a) (i) "Permanent, irrevocable fund" means a fund comprising cash, securities, mutual funds, or other investment assets established for a specific charitable, religious, educational, or eleemosynary purpose and managed, invested, and appropriated pursuant to the Uniform Prudent Management of Institutional Funds Act provided for in Title 72, chapter 30.
(ii) The term does not include a fund held by or for a tax-exempt organization to accomplish a charitable, religious, educational, or eleemosynary purpose from which contributions are expended directly for constructing, renovating, or purchasing operational assets, such as buildings or equipment.
(b) Subject to subsection (3), "planned gift" means an irrevocable contribution to a permanent endowment held by or for a tax-exempt organization when the contribution uses any of the following techniques that are authorized under the Internal Revenue Code:
(i) charitable remainder unitrusts, as defined by 26 U.S.C. 664;
(ii) charitable remainder annuity trusts, as defined by 26 U.S.C. 664;
(iii) pooled income fund trusts, as defined by 26 U.S.C. 642(c)(5);
(iv) charitable lead unitrusts qualifying under 26 U.S.C. 170(f)(2)(B);
(v) charitable lead annuity trusts qualifying under 26 U.S.C. 170(f)(2)(B);
(vi) charitable gift annuities undertaken pursuant to 26 U.S.C. 1011(b);
(vii) deferred charitable gift annuities undertaken pursuant to 26 U.S.C. 1011(b);
(viii) charitable life estate agreements qualifying under 26 U.S.C. 170(f)(3)(B);
(ix) paid-up life insurance policies meeting the requirements of 26 U.S.C. 170.
(c) "Qualified endowment" means a permanent, irrevocable fund that is held by a Montana incorporated or established organization that:
(i) is a tax-exempt organization under 26 U.S.C. 501(c)(3); or
(ii) is a bank or trust company, as defined in Title 32, chapter 1, part 1, that is holding the fund on behalf of a tax-exempt organization.
(2) (a) Terms in a document creating a donor restriction, such as those provided for in subsection (2)(b), intending to qualify a gift for the tax credit referenced in 15-30-2328, 15-30-2329, 15-31-161, 15-31-162, and this section, require that the gift satisfy the current definition of permanent, irrevocable fund and not any previous definition unless other language in the document demonstrates a different intent.
(b) The restrictions referenced in subsection (2)(a) include but are not limited to a requirement that the contribution be held in a "qualified endowment" or "permanent, irrevocable fund" or that the "present value of the fund at the time of the planned gift or outright contribution" not be expendable.
(c) Subsections (2)(a) and (2)(b) apply to funds and terms existing on or established on April 26, 2013. As applied to permanent, irrevocable funds existing on April 26, 2013, this subsection (2) governs only decisions made or actions taken on or after that date.
(3) (a) A contribution using a technique described in subsection (1)(b)(i) or (1)(b)(ii) is not a planned gift unless the trust agreement provides that the trust may not terminate and the beneficiaries' interest in the trust may not be assigned or contributed to the qualified endowment sooner than the earlier of:
(i) the date of death of the beneficiaries; or
(ii) 5 years from the date of the contribution.
(b) A contribution using the technique described in subsection (1)(b)(vii) is not a planned gift unless the first partial or full-year payment of the annuity is required to begin within the life expectancy of the annuitant or of the joint life expectancies of the annuitants, if more than one annuitant, as determined using the actuarial tables adopted by rule by the department in effect on the date of the contribution.
(c) A contribution using a technique described in subsection (1)(b)(vi) or (1)(b)(vii) is not a planned gift unless the annuity agreement provides that the interest of the annuitant or annuitants in the gift annuity may not be assigned to the qualified endowment sooner than the earlier of:
(i) the date of death of the annuitant or annuitants; or
(ii) 5 years after the date of the contribution.
(d) A contribution using a technique described in subsection (1)(b)(vi) or (1)(b)(vii) is not a planned gift unless the annuity is a qualified charitable gift annuity as defined in 33-20-701.
(e) A contribution using a technique described in subsection (1)(b)(vii) is not a planned gift unless the annuity rate to be paid is at least 5%.
(4) The department shall adopt rules to prepare life expectancy tables that are derived from the actuarial tables contained in the most recent Publication 1457 by the internal revenue service.
History: En. Sec. 1, Ch. 537, L. 1997; amd. Sec. 1, Ch. 226, L. 2001; amd. Sec. 3, Ch. 411, L. 2001; amd. Sec. 7, Ch. 482, L. 2003; amd. Sec. 1, Ch. 208, L. 2007; Sec. 15-30-165, MCA 2007; redes. 15-30-2327 by Sec. 1, Ch. 147, L. 2009; amd. Sec. 1, Ch. 317, L. 2013.