Administrative Rules of Montana › Department 42 - REVENUE › Chapter 42.4 - TAX CREDITS › Subchapter 42.4.5 - Individual - Capital Gain Credit › Rule 42.4.502 - CAPITAL GAIN CREDIT

Current through Register Vol. 13, July 5, 2024
(1) An individual
				may claim a credit against their Montana individual income tax of up to 2
				percent of their net capital gain. The credit is based on the net capital gain
				as shown on the individual's Montana individual income tax return. Spouses who
				file a joint return for federal income tax purposes but a separate return for
				Montana income tax and who elect to claim the same amount of capital loss
				deduction as shown on their joint federal income tax return as provided in
				15-30-2110, MCA, must compute the
				capital gain credit consistently. The credit is nonrefundable and may not be
				carried back or carried forward to any other tax year. The credit must be
				applied before any other credit.
(2) A nonresident or a part-year resident
				must apply the credit to Montana tax computed as if he or she were a resident
				during the entire tax year.
(3) For
				an estate or trust filing a Form FID-3, Montana fiduciary return, the credit is
				calculated on the net capital gains reported minus any net capital gains
				distributed to any beneficiary.
(4)
				Married taxpayers filing separately must compute and report their capital gains
				and losses as provided in ARM
				42.15.206.
(5) Spouses may elect to report all of their
				capital gains and losses separately for the current and future tax years. An
				election is made by claiming a capital gains credit calculated on a net capital
				gain amount that is different from the net capital gain shown on the taxpayer's
				joint federal income tax return, or claiming a capital loss deduction that is
				greater than the amount that would be allowed for federal income tax purposes
				if the taxpayer had filed a separate federal income tax return.
(6) The following are examples of how the
				credit is applied:
(a) Example: For tax year
				2017, John and Barbara file a joint 2017 federal income tax return reporting
				$2,000 of net capital gain. John's income consists of $50,000 in wages and
				$8,000 of net capital gain. Barbara's income consists of $35,000 in wages and
				$6,000 of net capital loss. If they file separately rather than jointly for
				Montana, unless they elect to separately report their capital gains and losses
				for this and future years as provided in (5), their capital gain credit is 2
				percent of their net capital gain of $2,000, or $40.
(b) Example: Assume the same facts as the
				example in (a) except that the spouses do elect to separately report their
				capital gains and losses as provided in (5). John may claim a capital gain
				credit of up to $160 ($8,000 x 2%) against his Montana income tax. Barbara is
				not entitled to claim any credit against her tax.
Montana
							 Return
Federal Return
Column A
Column B
Wages
$85,000
$50,000
$35,000
Sch. D capital gain (loss)
$ 2,000
$ 8,000
($ 6,000)
Fed. adjusted gross income
$87,000
$58,000
$32,000
Montana adjustment for capital loss limit
$ 4,500
Montana adjusted gross income
$94,500
$58,000
$36,500
Montana capital loss carryover
($ 4,500)