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The Montana Tax Credit for Qualified Endowment Gift |
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A unique opportunity available to Montana Taxpayers |
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| MontanaTaxpayers: |
| Montana taxpayers that make a qualifying gift to endowment may be able to take a credit against their Montana income tax liability. |
| The law authorizing the credit is effective for gifts made through December 31, 2013. |
| How It Works: |
- The gift must be to endowment (e.g. the gift is held and invested in perpetuity and only the income can be used to support the endowed purpose) held by a qualified charitity, such as the Montana State University Foundation, to benefit Montana citizens or groups. The gift can create an endowment or it can be made to an existing endowment. To learn more about endowments, visit the endowments page.
- The credit may not exceed the taxpayer's Montana income tax liability and is limited to a percent of the value of the charitable gift.
- The maximum an individual taxpayer may take from gifts to all sources is $10,000.
- The taxpayer may take a tax-credit or a tax-deduction for the amount being claimed, but not both.
- The credit must be applied in the tax year in which the gift was made. There is no carry back or carry forward provision, but a gift can be made in each year the law is in effect.
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| Planned Gift: |
| The gift from an individual must be made through a planned gift. These are gifts are generally used by individuals and families to make an irrevocable commitment of an asset for the future benefit of a charity while retaining the lifetime use or benefit of the asset. Planned gifts that qualify for the credit are: |
- Paid-up Life insurance
- Charitable Lead Trusts
- Charitable Gift Annuities
- Life Estate Agreement
- Charitable Remainder Trusts
- The credit may not exceed the taxpayers Montana income tax liability and is limited to 40% of the value of the charitable gift.
For details on these types of gifts, visit our gift planning website at http://plannedgiving.montana.edu or contact us at plannedgiving@montana.edu. |
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| Gifts From an Entity Other Than Individuals or Sole Proprietors: |
- Small Business: Partnerships, limited liability companies (LLC’s), and small business (S) corporations are entitled to the tax credit for outright endowment gifts. The credit flows through to the shareholders or members in the same proportion income is distributed to them. The maximum credit a shareholder of a small business corporation, a partner, member, or manager may claim in a year is the lesser of Montana income tax liability and $10,000, limited to 20% of the gift value.
- Large Business: A Montana Corporation that makes an outright gift to permanent endowment is allowed a credit in an amount equal to 20% of the charitable gift against Montana income tax otherwise due. The maximum credit that may claimed by a corporation for contributions from all sources in a year is $10,000.
- Corporate and Foundation Gifts
- Estates: A contribution to a qualified endowment by an estate qualifies for the credit, appropriate when made to a planned gift and when made outright. Any credit not used by the estate may be passed through to the beneficiaries in the same proportion as each distributive share or income or loss for Montana income tax purposes. The maximum credit that a beneficiary may claim is the lesser of Montana income tax liability and $10,000.
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| Click here for more specific details about the Montana Tax Credit |
For more information on taking advantage of the benefits of the Montana Tax Credit, contact the Office of Gift Planning at (406) 994-2053 or email: plannedgiving@montana.edu |
