Administrative Rules of Montana › Department 42 - REVENUE › Chapter 42.9 - PASS-THROUGH ENTITIES › Subchapter 42.9.1 - General › Rule 42.9.107 - MULTI-TIERED PASS-THROUGH ENTITY STRUCTURES WITH MONTANA SOURCE INCOME - REPORTING REQUIREMENTS

Current through Register Vol. 13, July 5, 2024
(1) A pass-through
				entity may have, in addition to income from its own operations or activities,
				income from one or more other pass-through entities. This rule describes how
				the pass-through entity must classify its income from its own operations or
				activities as apportionable or nonapportionable income and how it must report
				its income from other pass-through entities. For purposes of this rule,
				"operations income" means the income of a pass-through entity from its own
				operations or activities and "flow-through income" means its separately and
				nonseparately stated distributable share of income from other pass-through
				entities.
(2) Except as provided in
				(5), each pass-through entity has to separately determine whether its
				operations income is apportionable or nonapportionable income as those terms
				are defined in ARM
				42.26.206.
				Once a pass-through entity determines the apportionable or nonapportionable
				character of its operations income, the entity must then determine what part of
				this apportionable and/or nonapportionable income is Montana source income.
				Except as provided in (5) and (6), the operations income retains its character
				as apportionable or nonapportionable income and as Montana source income
				regardless of how many other tiers of pass-through entities through which the
				income is passed.
(3) Except as
				provided in (5) and (6), flow-through income of a pass-through entity,
				determined as provided in (1), retains its character as apportionable and/or
				nonapportionable income and its character as Montana source income.
(4) An entity in a multi-tiered pass-through
				entity structure may have flow-through income sourced to Montana under the
				subsections of the definition of "Montana source income" in
				15-30-2101, MCA, that
				address partnership or S corporation income derived from Montana activity or
				property, reportable on Montana Schedule K-1, and also operations income
				sourced to Montana as a result of its own business activity under other
				subsections of that definition of "Montana source income," such as net income
				from a business, profession, or farming activities carried on in the state. If
				this occurs the entity must allocate to Montana the flow-through income sourced
				to Montana and the entity must determine the portion of its operations income
				that is sourced to Montana as provided in (1) and allocate or apportion that
				Montana source income under the provisions of [42.9.112 ].
(5) This rule does not apply to a partnership
				or disregarded entity whose operations are unitary with the business operations
				of a corporate partner or disregarded entity owner that is a C corporation
				whose apportionment factors are included in the computation of the C
				corporation's apportionment factors as provided in ARM
				42.26.228.
(6) Nothing in this rule prevents the
				department from determining the apportionable or nonapportionable character of
				an entity's operations income or the Montana source character of its Montana
				flow-through income sourced to Montana.
AUTH:
					 15-1-201,
					 MCA; IMP:
					 15-1-601,
					 15-30-3302,
					 15-30-3311,
					 15-31-301,
					 MCA