2019 Montana Form PTE
Pass-Through Entity Instructions
MONTANA DEPARTMENT OF REVENUE
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MTRevenue.gov
Your Tax Dollars at Work
What are Montana’s Public Revenues?
Total Montana State and Local Revenue, Fiscal Year Ending 2016
Federal
Revenue
31%
Property Taxes
18%
Tuition and Other
Charges for Services
15%
Individual and
Corporate
Income Taxes
13%
Other Taxes
8%
Interest Earnings
and Other
8%
Natural Resource Taxes
2%
Utility and Liquor Sales
3%
Motor Fuel Taxes
3%
Where Do Your Public Dollars Go?
Total State and Local Spending in Montana, Fiscal year Ending 2016
Public Schools
21%
Health and
Human Services
27%
Higher Education
12%
Transportation
11%
Administration,
Judiciary, and Other
12%
Environment, Housing,
Natural Resources, Parks
8%
Public Safety
8%
Interest on Debt
2%
Dear Montana Taxpayer,
Thank you for ling your Montana tax return
To make ling of your tax return as easy as possible, we have made some changes.
Please see the What’s New section for the changes to our 2019 tax forms.
It is important for Montanans to know where your tax dollars go. In the graphs below,
you can see where tax revenues come from and how they are used to support
important services and infrastructure.
We are committed to assisting you with any questions you may have about your ling
requirements. If you need more information or would like help, please visit MTRevenue.
gov visit or call our help line at (406) 444-6900.
Also, we encourage you to le electronically. Last year more than 84 percent of
business taxpayers led electronically. Taxpayers nd that e-ling is easy, convenient,
and helps ensure accurate processing. It can also help you get any refund you are
owed more quickly.
Best regards,
Your Montana Department of Revenue
Contents
What’s New for 2019? .................................................................................................... i
Legislative Change.................................................................................................. i
Interest Rate for 2020 ............................................................................................. i
General Instructions .......................................................................................................1
Purpose of the Form ...............................................................................................1
Denitions used in these instructions ......................................................................1
Who must le? ........................................................................................................1
Due Date .................................................................................................................1
Filing Form PTE ......................................................................................................1
How to Pay ..............................................................................................................2
Amending Form PTE...............................................................................................3
Tax Records ............................................................................................................3
Line Instructions .............................................................................................................3
Entity Information ....................................................................................................3
Lines 1 through 11 – Owners’ Distributive Share of Income Items..........................4
Line 15 through 20 – Owners’ Distributive Share of Montana Source Income .......4
Lines 21-33 Calculation of Amount Owed or Refunded ..........................................5
Sign the Return .......................................................................................................7
Paid Preparer ..........................................................................................................7
Assemble the Return...............................................................................................8
Schedule I – Apportionment Factor for Multistate PTEs .........................................8
Schedule II – Montana PTE Tax Credits ................................................................9
Schedule IV – Montana PTE Composite Income Tax Schedule ............................9
Schedule VI – Reporting of Special Transactions .................................................10
Disregarded Entities Owned by the Pass-Through Entity ......................................10
Schedule VII – List of Disregarded Entities ............................................................10
Schedule DE ..........................................................................................................11
Montana Source Income Schedule ........................................................................11
Montana Adjustments Worksheet ..........................................................................11
Montana Schedule K-1...........................................................................................12
Apportionable Income Worksheet ..........................................................................16
Page i2019 Montana Form PTE Instructions
This booklet is designed to address the laws for the majority of tax ling situations. If you have a
unique situation that is not addressed in the booklet, please refer to Title 15 of Montana law found at
leg.mt.gov or call us with your questions.
What’s New for 2019?
New Form!
Beginning with Tax Year 2019, partnerships and S corporations will now le Montana Pass-Through Entity
Tax Return (Form PTE). Forms PR-1 and CLT-4S have been discontinued.
Partnerships and S corporations have identical ling and reporting requirements in Montana.
The department developed Form PTE, and discontinued Forms PR-1 and CLT-4S, to simplify their
reporting requirements and make processing eorts more ecient.
Please note that for tax years beginning before January 1, 2019, partnerships will le Form PR-1 and
S corporations will le Form CLT-4S. These forms are available on our website.
New Reporting Requirements for Disregarded
Entities. Beginning with Tax Year 2019, a
single member limited liability company or a
qualied subchapter S subsidiary owned by a
pass-through entity is required to be included in
its owner’s income tax return. They will no longer
le Form DER-1. Having disregarded entities le
on their owners’ returns reduces ling complexity
and reduces the number of payments a PTE and
its disregarded entity must make. Please note that
for tax years beginning before January 1, 2019,
disregarded entities owned by pass-through entities
will le Form DER-1.
New Schedule VII and Schedule DE. Schedule VII is
used to report all disregarded entities owned by the
pass-through entity. Schedule DE is used to report
each disregarded entity’s Montana source income.
New Montana Source Income Schedule (MTSI) and
Montana Adjustments Worksheet. The Schedule
MTSI and Montana Adjustments Worksheet will
provide accuracy and consistency in reporting
adjustments to taxable income and Montana source
income. Schedule MTSI is used to total Montana
source income of PTEs with multi-state activities that
must be reported on Montana Schedules K-1. The
Montana Adjustments Worksheet is used to break
out the adjustments for taxable and Montana source
income that a pass-through entity must report.
Updates to the Montana Schedule K-1. The
Montana Schedule K-1 now has two columns to
break out each owner’s everywhere income and
Montana source income. This will assist multistate
pass-through entities in reporting Montana source
income to their owners.
Legislative Change
Business deduction when a federal credit
is claimed. Beginning with Tax Year 2019,
businesses that claim a federal credit are allowed
the corresponding business expense as a
deduction for Montana tax purposes when this
deduction is disallowed for federal tax purposes.
For example, employers receiving the federal
credit for Social Security and Medicare taxes paid
on certain employee tips are now allowed to take
the related expense as a deduction. This deduction
is limited to business expenses and does not
impact expenditures that must be capitalized.
See Montana Adjustments Worksheet, code SC.
Interest Rate for 2020
Eective January 1, 2020, the annual interest
rate assessed on outstanding balances is 5
percent. This rate also applies to underpayment of
estimated taxes.
Page 12019 Montana Form PTE Instructions
General Instructions
Purpose of the Form
Form PTE is an information return and a composite
tax return for pass-through entities with Montana
source income and pass-through entities
registered to do business in Montana. It includes
schedules for the reporting of Montana source
income derived from the activities of disregarded
entities owned by the PTE.
Denitions used in these
instructions
Disregarded entity (DE) – a business entity that is
disregarded as a separate entity from its business
owner for federal tax purposes. DEs owned by
a partnership or an S corporation are usually a
single member limited liability company (LLC) or
a qualied subchapter S subsidiary. Disregarded
entities owned indirectly through a series of
disregarded entities are considered owned directly
by the PTE for the purpose of reporting their
Montana source income on Form PTE.
Federal return – federal Form 1065 for partnerships
and federal Form 1120S for S corporations.
Owner – includes a partner, a member of an LLC, or
a shareholder.
Pass-through entity (PTE) – partnership,
S corporation or DE.
Participant – owner participating in a composite return.
Partnership – includes a general partnership, limited
partnership, limited liability partnership, publicly
traded partnership, limited liability company
(LLC) treated as a partnership for federal income
tax purposes, or any other entity treated as a
partnership for federal income tax purposes.
S corporation – a corporation that is an S corporation
for federal income tax purposes.
Simple entity – a partnership or an S corporation that:
● is doing business only in Montana,
● only has Montana resident individual owners,
● is not receiving any Montana Schedules K-1
from a lower-tier PTE, and
● does not own a DE.
Who must le?
A partnership or an S corporation must le a Form PTE
annually if the PTE, or one of the DEs it owns:
● has any amount of Montana source income,
whether a gain or loss;
● led a return in a prior year and did not mark
the return nal; or
● is registered to do business with the Montana
Secretary of State.
If an entity led a return for a prior year or is
registered with the Montana Secretary of State but
did not engage in any activity in Montana, including
through a disregarded entity, the entity must le an
Adavit of Inactivity for Corporations, Partnerships
and Disregarded Entities (Form INA-CT). This form
is available at MTRevenue.gov.
Due Date
The due date for a Montana pass-through entity
return is March 15 or, for scal lers, the 15th day
of the third month following the close of the entity’s
tax year. The due date for ling a 2019 Montana
pass-through entity return is March 16, 2020.
Extension to le Form PTE
A PTE is granted an automatic extension of time to
le of up to six months. An extension of time to le
is not an extension to pay. If the entity does not pay
the amount of tax due by the original due date, it
will owe interest and penalties on any balance due.
Filing Form PTE
File electronically! File the Montana and federal
returns separately or at the same time through a tax
professional who is an authorized IRS e-le provider,
or with software approved by the department.
If the entity les its return electronically, it does
not have to mail in a paper copy of the return, any
accompanying federal Forms 1099, or any other
Montana supplemental forms. When the PTE les
its return electronically, it represents that it has
kept all the required documents as its tax record
and that it will provide copies of these if we ask
for them. The president, vice president, treasurer,
assistant treasurer, or chief accounting ocer of
an S corporation, or the general partner or limited
liability company member manager, do not have to
sign a copy of the return and submit it to us. The act
of completing and ling the return electronically is
considered an authorized signature.
For more information regarding electronic ling,
visit MTRevenue.gov or irs.gov.
Page 22019 Montana Form PTE Instructions
Partnership with more than 100 partners.
A partnership with more than 100 partners over
the course of its tax year is required to le the
Form PTE electronically. The partnership may be
eligible to receive a hardship waiver by completing
the Partnership E-le Waiver Request (Form PWR).
The partnership must submit the request at least
30 days before the due date of the return, including
extensions. For more information about e-ling, go
to MTRevenue.gov or call us at (406) 444-6900.
Paper Filing. If the entity les Form PTE on paper,
it must also include a complete copy of the federal
Form 1065 (U.S. Return of Partnership Income), or
federal Form 1120S (U.S. Income Tax Return for
an S Corporation), with all federal Schedules K-1,
statements and documents.
If the entity chooses not to le electronically, mail
the return to:
Montana Department of Revenue
PO Box 8021
Helena, MT 59604-8021
Form PTE must include a Montana
Schedule K-1 for each owner regardless of
how you le your return.
We do not accept copies of federal Schedules K-1
in place of completed Montana Schedules K-1.
If a Montana Schedule K-1 for each owner is not
included with the return, the processing of the
entity’s return will be delayed until we receive the
schedules and the return may be subject to a late
ling penalty.
Owners other than resident individuals, trusts
and estates. When a PTE has an owner that is a
nonresident (individual, estate, or trust), second-
tier pass-through entity, or a foreign C corporation
at any time during the year, it has additional ling
requirements:
● Form PT-AGR (Montana Pass-Through Entity
Owner Tax Agreement), if applicable.
● Schedule IV (Montana Composite Income Tax
Schedule), if applicable, is the composite tax
return that the PTE completes and les on
behalf of eligible owners who have elected to
participate in the composite ling.
Multistate activities. If the PTE or one of its DEs
is engaged in multistate activities, it may have to
include with its return:
● Schedule I (Apportionment Factor for
Multistate PTEs)
● Schedule DE
● Montana Source Income Schedule
TIP – If the PTE is a simple entity, it is required to
include:
● Form PTE, pages 1 and 2
● Montana Schedule K-1 for each owner
If applicable, the PTE must also include:
● Schedule II (Montana PTE Tax Credits)
● Schedule VI (Reporting of Special
Transactions)
How to Pay
A PTE can pay its Montana taxes electronically by:
● Electronic funds withdrawal when e-ling
return. You can Schedule your withdrawal for a
later date.
● E-check or credit/debit card. Visit
https://tap.dor.mt.gov There is a small fee
when paying with a credit or debit card.
● Personal check, money order, or cashier’s check.
Be sure to include the payment voucher
available at MTRevenue.gov. Make your check
payable to the Montana Department of Revenue,
sign your check, and write your FEIN, name of
the PTE, and “Tax Year 2019” on the memo line.
Note: We may need to adjust your payment if it is
not in U.S. funds.
Interest and late payment penalties will be
assessed on any amount not paid when due. For
more information regarding electronic payment
options, visit MTRevenue.gov.
Page 32019 Montana Form PTE Instructions
Amending Form PTE
Complete the entire Form PTE using the corrected
amounts. Mark the “Amended Return” box on
the Form PTE. Include applicable forms and
statements that explain in detail the reasons for
amending the tax return.
If the amended tax return results in a change to
income or a change in the distribution of any income
or other information provided to any owner, the entity
will need to le amended Montana Schedules K-1
and non-amended Montana Schedules K-1 with an
amended Form PTE. The entity must give a copy of
the amended Montana Schedule K-1 to each owner.
If the entity led the original Form PTE
electronically through the joint federal/state
program, then it can e-le an amended Form PTE
as long as the software supports amended ling.
If the entity les an amended tax return that shows
it owes an increased amount of taxes, it may have
the late payment penalty waived. Simply mark the
“Amended Return” box on the form and pay the
tax and applicable interest in full when the entity
les the amended return. By marking this box
and paying all tax and interest in full, the entity is
requesting a waiver of the late payment penalty.
If the IRS changes or makes corrections to the
entity’s federal return or if the entity amends its
federal return, the entity must le an amended
Form PTE within 90 days after either receiving
the IRS’s notication of the corrections made to
its federal income tax form or ling its amended
federal tax return. Include a copy of the entity’s
federal corrections or amended federal return with
the amended Form PTE.
Tax Records
PTEs should keep all tax records for at least as
long as the statute of limitations is in eect for the
tax period. In most cases, the statute of limitations
is three years from the date the return is led
for tax periods beginning on or after January 1,
2015, and ve years for periods beginning before
then. Omitting a signicant amount of income
may extend the statute an additional two years.
PTEs should keep property records and carryover
information even longer.
Line Instructions
Entity Information
Tax Year. The PTE must use the same tax year used
for federal income tax purposes (as indicated
on the federal return) for Montana income tax
purposes. If the PTE has a scal year, enter the
beginning and ending dates of the scal year. Use
the 2018 Form PR-1 or Form CLT-4S if the PTE’s
scal year began in the 2018 calendar year.
Mark the Final Return box if the PTE ceased to
exist during Tax Year 2019.
Name and Address. Enter the entity’s name (as it
appears in the partnership agreement, articles of
incorporation, or other formation documents) and
mailing address in the spaces provided.
Federal Employer Identication Number (FEIN).
Enter the same FEIN used on your federal return.
Montana uses the FEIN for identication purposes.
If the entity changed its FEIN during the tax
year, include a statement with the tax return that
identies the previous FEIN.
Federal Business Code/NAICS. Enter the Principal
Business Code from page 1, Box C, of your federal
form. The Principal Business Activity Code is based
on the North American Industry Classication
System (NAICS).
For further information, visit naics.com.
MT Secretary of State ID Number. Enter the entity’s
Montana Secretary of State Identication number.
The identication number begins with a letter
followed by six to eight digits. The PTE received
this number when it registered to do business in
Montana. Enter the letter, followed by the next six
to eight digits of the number. Leave any extra boxes
blank. To nd the PTE’s identication number,
visit the Montana Secretary of State’s website at
sosmt.gov and search for the PTE’s business name
under the Business Services section. If your entity
is not registered with the Secretary of State and
does not have an identication number, leave this
area blank.
Page 42019 Montana Form PTE Instructions
Date of Registration in Montana. If the entity
registered with the Secretary of State to do
business in Montana, enter the registration date.
State Formed In. Enter the state in which the PTE
was formed and the date it was formed. If the PTE
was formed in a foreign country, enter that country.
Schedules K-1 and Owner Information. The PTE
must include a Montana Schedule K-1 for each
owner with the Form PTE. Enter the number of
Montana Schedules K-1 included with the return.
Also enter the number of residents, nonresidents,
and other types of owners. An example of another
type of owner is a foreign C corporation.
Lines 1 through 14 – Owners’
Distributive Share of Income Items
Enter the corresponding amounts reported on the
federal Schedule K.
Line 4 – Guaranteed Payments. If the PTE is
a partnership, enter the amount reported on
Form 1065, Schedule K, line 4. S corporations must
leave this line blank or enter 0 (zero).
Line 6 – Ordinary Dividends. Enter the total amount
of ordinary dividends reported on the federal
Schedule K. Montana taxes dividends as ordinary
income and does not apply the federal rate for
qualied dividends.
Line 13 – Owners’ Distributive Share of Deduction
Items. Enter the amount of deductions reported
on the federal Schedule K. Include a detailed
statement for lines 13d and 13e.
Line 15 through 20 – Owners’
Distributive Share of Montana
Source Income
TIP – Simple entities just need to complete
lines 15, 16a, 16, and 17, mark the Schedule I
Not Required box, enter 100% on line 18, and
skip lines 19a through 19. Enter the total Montana
source income on line 20.
Lines 15 and 16a. Report Montana adjustments
based on your apportionable income as reported
on Montana Adjustments Worksheet, column A.
Do not include adjustments from other columns.
Simple entities will report their adjustments on
lines 15 and 16a. The PTE must include the
Montana Adjustments Worksheet with its return if
it reports any adjustments. See the instructions for
the Montana Adjustments Worksheet on page 11.
Line 15 – Montana Additions from PTE’s
Apportionable Activities. To compute Montana
income taxable to owners, certain items must be
added to income. Enter the total additions the PTE
derives from its own apportionable operations from the
Montana Adjustments Worksheet, Part 1, column A.
Line 16 – Deductions. To compute Montana income
taxable to owners, certain items are deducted
from income.
Line 16a. Enter the total Montana subtractions
the PTE derives from its own apportionable
operations reported on the Montana
Adjustments Worksheet, Part 2, column A.
Line 16b. Enter the sum of all distributive items
of income (loss) from all federal Schedules K-1
received from other pass-through entities.
Line 16c. Enter the sum of income (loss)
derived from disregarded entities that are not
segments. Segments’ apportionable income is
included in the PTE’s apportionable income.
This is the DE’s amount of federal income
from all sources before Montana adjustments.
Line 16d. Report nonapportionable income or
losses derived from the PTE’s own activities
on this line. This income is not included in
computing the PTE’s income apportioned to
Montana. This includes nonapportionable
income (loss) that is allocated to a specic
state. Include a statement justifying why such
income is considered nonapportionable.
Guaranteed payments issued for services
performed are allocated to the state where
the services were performed and must be
deducted on this line.
Line 18 – Income Apportioned to Montana. For
entities engaged in business only in Montana,
enter 100 percent as the apportionment percentage
and enter the full amount that is reported on line 17.
For multistate entities, if the Schedule I Not
Required box is marked, enter 0 percent and
go to line 19. Otherwise, multiply the amount
that is reported on line 17 by the apportionment
percentage reported on Schedule I, line 5. Enter
the result on line 18. See the instructions for
Schedule I on page 8.
Page 52019 Montana Form PTE Instructions
Line 19 – Total Nonapportionable Income Sourced
to Montana
Line 19a. Report the total Montana source income
from the sum of Montana Schedules K-1, Part 5,
line 1, received from other pass-through entities.
Line 19c. Report the total adjusted nonapportionable
income (loss) allocated to Montana from the PTE’s
own activities. To compute this amount, start with
the total Montana source income from the Montana
Source Income Schedule, column C. Adjust this
amount by Montana source total additions and
subtractions from Montana Adjustments Worksheet,
Parts 3 and 4, column B.
For the amount reported on line 19c, the PTE must
include each of the following with Form PTE:
● a statement showing each item of Montana
source income subject to allocation and its
related expenses,
● a statement explaining the reason for treating
the item of income as Montana source income
subject to allocation, and
● a copy of the other state’s income tax or
information return if the PTE allocates to a
state other than Montana. If the PTE is not
required to le an income tax or information
return with the other state, the PTE must
indicate this in a statement.
Lines 21-33 Calculation of Amount
Owed or Refunded
TIP – Simple entities can skip lines 21 and 22.
Enter the amount of mineral royalty tax withheld on
the PTE’s behalf on line 23a and 23 and skip line 24.
Complete the rest of the page as required.
Before completing lines 21-24, complete
Schedule II (Credits) and Schedule IV
(Composite Tax), if applicable. Then complete all
owners’ Montana Schedules K-1.
Line 21 – Total Montana Composite Return Tax.
Enter the total amount of composite tax reported on
Schedule IV, column H. See instructions on page 9.
The amount on this line must equal the sum of Part 5,
line 2, on all Montana Schedules K-1 led by this entity.
Line 22 – Sum of Owner Withholding from all
Montana Schedules K-1. Enter the sum of owner
withholding reported on all Montana Schedules K-1,
Part 5, line 3a. This is the total amount due from
the PTE to Montana on behalf of its owners. The
owners will claim this amount as a refundable credit
on their own Montana tax returns.
Line 23a. Enter the total amount of mineral royalty
tax withheld on behalf of the PTE, including by a
lower-tier PTE. These amounts are found on federal
Forms 1099-MISC and Montana Schedules K-1.
Attach copies of the Forms 1099-MISC and Montana
Schedules K-1 showing amounts withheld.
Royalty payments made to owners of Montana
mineral rights are subject to withholding if certain
thresholds are met. This withholding should not
be confused with the amounts deducted from the
PTE’s royalty payments for production taxes. For
more information, visit MTRevenue.gov.
Line 23b. Enter the amount of mineral royalty
tax withheld reported on line 23a that is
distributed to owners. The amount on this line must
equal the sum of Part 5, line 4, on all Montana
Schedules K-1 led by this PTE with this return.
Line 24a. If the PTE has an ownership interest in a
lower-tier PTE that had Montana source income and
the lower-tier PTE paid Montana income tax on behalf
of the PTE, enter the amount here. This amount is
reported to the PTE on a Montana Schedule K-1.
Attach copies of the Montana Schedules K-1 that
report amounts withheld on your behalf.
Line 24b. Enter the amount of Montana pass-through
withholding reported on line 24a that is distributable
to owners. The amount on this line must equal
the sum of Part 5, line 3b, on all Montana
Schedules K-1 led by the PTE.
Line 26c. Enter any payment made for 2019
composite tax or pass-through withholding made on
or before March 16, 2020.
Line 26d. If the PTE is amending the 2019 return,
enter any payments the PTE made when it led its
original tax return and any subsequent payments
that were applied to the PTE’s 2019 tax liability.
Line 26e. If the PTE is amending the 2019 return,
enter the amount of any refund the PTE received
when it led its original tax return or a previously
amended tax return.
Line 28a. A PTE is charged a late ling penalty if it les
Form PTE after the due date, including the automatic
six-month extension. The penalty is $10 multiplied
by the number of owners at the close of the tax year
for each month or fraction of a month that the entity
does not le the PTE information return. This penalty
is calculated for up to ve months and may not
exceed $2,500. See 15-30-3302, MCA.
A late ling penalty is not imposed on an entity that has
10 or fewer owners that are individuals, estates of a
deceased individual, or C corporations, if the owners
have led the required returns or other required reports
timely and have paid all taxes when due.
Page 62019 Montana Form PTE Instructions
Line 28b. The PTE is required to make estimated tax
payments throughout the year if it expects to owe a
composite income tax liability of at least $500. If the
PTE was required to make estimated composite tax
payments and it did not pay the required amounts,
it will have to pay interest on any underpayment.
To calculate the underpayment interest, complete
Worksheet I. See 15-30-3312, MCA.
Worksheet I – Calculation of
Underpayment Interest Short Method
In 2019, the PTE was required to pay through
estimated installments the smaller of:
● 90 percent of the current year’s total
composite tax liability, or
● an amount equal to 100 percent of the
previous year’s total composite tax liability.
If the PTE does not meet one of these two
requirements, the composite tax is subject to
underpayment interest.
Payments made with extensions are not considered
estimated payments.
1
Enter the total 2019 composite tax
reported on page 2, line 21
1
2
Enter 90 percent of line 1
2
3
Enter the total of page 2, line 25 and
line 26a, attributable to composite tax
participants
3
4
Subtract line 3 from line 1.
If the result is $500 or less, stop here.
The PTE does not owe interest on its
underpayment.
4
5
|
Enter the 2018 composite tax from the
2018 Form PR-1, line 22, or
2018 Form CLT-4S, line 21
5
6
Enter the smaller of line 2 or line 5
6
7
Enter the total of line 3 and the amount
reported on line 26b attributable to
composite tax participants
7
8
Subtract line 7 from line 6.
If zero or less, stop here. The PTE does
not owe interest on its underpayment.
8
9
Multiply line 8 by 0.029 and enter the result
9
10
If the amount on line 8 was paid on or after
the due date, enter 0.
If the amount on line 8 was paid before the
due date, multiply the amount on line 8 by
the number of days paid before the due
date. Multiply the result by 0.000137.
10
11
Subtract line 10 from line 9. Enter the
result here and on line 28b. This is the
PTE’s underpayment interest.
11
Line 28c. If the PTE is late in ling a Form PTE that
includes a composite tax participant, a late ling
penalty will be charged. The late ling penalty is
the greater of $50 or 5 percent per month on the
unpaid amount from the extended due date until the
return is led or the tax is paid. This penalty cannot
be less than $50 or exceed 25 percent of the PTE’s
tax liability on line 27.
Line 28d. The late payment penalty is equal to
0.5 percent per month, calculated daily, on the
unpaid amount from the original due date not
including extensions, until it is paid. The daily
rate is 0.0164 percent. Your late payment penalty
will never exceed 12 percent (24 months x
0.5%) of the unpaid tax. Late payment penalty
is automatically waived if you pay all the tax and
interest with your return, or within 30 days of the
rst notice from the department.
If the PTE les an amended tax return that reects an
increased tax liability, it may have the late payment
penalty waived. To receive the waiver, mark the
“Amended Return” box on Form PTE and pay the
tax and applicable interest in full when the PTE les
the amended return. By marking this box and paying
all tax and interest, the PTE is treated as having
requested a waiver of the late payment penalty.
Line 28e. Compute interest on any tax liability
(line 27) that the PTE has not paid by the due date
of the tax return and enter the total on this line.
Eective January 1, 2020, the interest rate is 5
percent. To calculate the amount of interest, multiply
line 28 by 0.0137% (0.000137), and then multiply
that product by the number of days between
March 16, 2020, and the day the PTE’s tax is paid.
A valid extension of time to le the PTE’s tax return
does not extend the due date to pay the PTE’s
income tax liability after March 16, 2020.
Line 30 – Amount You Owe. If the amount on line 29
is greater than zero, enter it on this line. This is the
amount due with the PTE’s tax return.
See “How to Pay” on page 2.
For more information about e-pay options,
visit MTRevenue.gov.
Interest and penalties will be assessed on any
amount not paid when due.
Line 31 – Overpayment. If the amount on line 29
is less than zero, enter it on this line. This is the
amount the PTE has overpaid.
Page 72019 Montana Form PTE Instructions
Line 32 – 2020 Estimated Tax Payments. All or
part of the overpayment that the PTE reported on
line 30 can be refunded or carried over as a 2020
estimated tax payment. Enter the amount of the
overpayment reported on line 31 that the PTE
wants applied to its 2020 estimated tax.
Line 33 – Refund. This is the amount of the refund
that will be issued.
If the PTE is requesting a refund, mark the box
located in the top portion of Form PTE, page 1.
If the PTE would like to use direct deposit, enter
the PTE’s nancial institution’s routing number
(RTN#) and the PTE’s account number (ACCT#)
in the spaces provided. The routing number will be
nine digits and the account number can be up to
17 characters, including numbers and letters. Mark
whether the PTE’s account is a checking or savings
account and if the PTE’s refund will go to a bank
outside of the United States and its territories (Midway
Islands, Puerto Rico, American Samoa, U.S. Virgin
Islands, Federated States of Micronesia, and Guam).
If the nancial institution does not accept direct
deposit, we will mail the PTE a refund check.
A sample of a personal check is provided
for reference.
Sign the Return
If the PTE is ling its return on paper, the return
is not valid unless the president, vice president,
treasurer, assistant treasurer or chief accounting
ocer of an S corporation, the general partner, or
limited liability company member manager signs the
return. Unsigned returns cannot be processed and
require us to contact the president, vice president,
treasurer, assistant treasurer or chief accounting
ocer of an S corporation, the general partner, or
limited liability company member for a signature.
If the PTE is ling its return electronically, the
president, vice president, treasurer, assistant
treasurer or chief accounting ocer of an S
corporation, the general partner, or limited liability
company member manager does not sign the
return. The act of ling electronically signies the
owner’s declaration, under the penalty of false
swearing, that:
● The shareholder, partner or member is
authorized to le the return;
● The information in the return is true, correct
and complete; and
● The act of ling electronically constitutes the
shareholder’s, partner’s, or member’s signature.
Paid Preparer
Paid preparers are required to sign the return
and include his or her address and Preparer Tax
Identication Number (PTIN) in the space provided.
May the DOR discuss this return with the tax
preparer?
If the PTE marks yes, we can discuss any concerns
that we might have with the 2019 tax return – a missing
schedule, for example – with the PTE’s tax preparer. If
the PTE does not mark the box, we cannot discuss the
return with anyone but an owner or someone to whom
the PTE has given a power of attorney that allows us to
discuss the return with him or her.
If yes is marked on a return by the PTE, the PTE is
authorizing us to contact the tax preparer to answer
any questions that arise while we are processing
the 2019 tax return.
By marking the box, the PTE is also authorizing us to:
● request that the tax preparer give us any
information that is missing from the return;
● respond to the tax preparer’s call to us for
information about the processing of the
PTE’s return or the status of the PTE’s
refund or payments;
● discuss certain notices from us about math
errors, osets, and return preparation.
Note: The department will only send notices
directly to the PTE, not to the tax preparer.
Page 82019 Montana Form PTE Instructions
The PTE is not authorizing the tax preparer to
receive any refund check, bind the PTE to anything
(including any additional tax liability), receive any
information about any other tax year or tax matter, or
otherwise represent the PTE before the department.
Be aware that this authorization cannot be revoked.
The authorization will, however, automatically
end no later than the due date, without regard to
extensions, for ling next year’s (2020) tax return.
This is March 15, 2021, for most PTEs.
If the PTE wants to expand or change the tax
preparer’s authorization (for example, to verify any
estimated payments it will make in the future), it can
use Form POA (Power of Attorney, Authorization to
Disclose Tax Information). Form POA can be led
electronically and is available at MTRevenue.gov.
Assemble the Return
If the PTE is ling a return on paper, assemble
the return, without using staples, according to the
following diagram or list. Include all Forms 1099.
*Include a copy of the returns from another state if the
PTE is a multistate entity.
Schedule I –
Apportionment Factor for
Multistate PTEs
TIP - If the PTE is a simple entity,
skip this schedule.
After the PTE determines its amount of
apportionable income, it will apply the
apportionment factor to calculate the portion
of Montana source income included in this
apportionable income. The apportionment factor is
the standard UDITPA (Uniform Division of Income
for Tax Purposes Act) three-factor formula of
property, payroll and receipts.
Include only the PTE’s own items of property,
payroll and receipts. Do not add in any
property, payroll, or receipts of another
pass-through entity, unless it is from a
disregarded entity that is a segment of the
PTE’s own activities.
The PTE must ask the department if it can determine
the amount of income that it attributes to Montana on
some basis other than the apportionment method. If
the department allows the PTE to use an alternative
method, the PTE will still need to complete and
submit Schedule I.
See Title 15, Ch. 31, part 3, MCA, and Title 15, Ch. 1,
part 6, MCA, for additional ling information.
To calculate each of the separate factors in the
apportionment factor, use the following formula:
column B divided by column A, multiplied
by 100. Round out to the fourth decimal
(example: 25.5555%).
Line 1 – Property Factor. The property factor is
a fraction. The numerator is the average value
of the PTE’s real and tangible personal property
owned, leased or rented and used in Montana in
the production of apportionable income during the
tax period. Mobile property is generally included in
the Montana column based on the portion of the
year the property was located in the state. Enter
the numerator values in column B of Schedule I.
The denominator is the average value of all of the
PTE’s real and tangible personal property owned,
leased, or rented and used in the production of
apportionable income during the tax period. Enter
the denominator values in column A of Schedule I.
Line 2 – Payroll Factor. The payroll factor is a
fraction. The numerator is the total amount that
the PTE paid for compensation attributable to the
production of apportionable income during the tax
period in Montana. Enter the numerator values in
column B of Schedule I. The denominator is the
total amount that the PTE paid for compensation
attributable to the production of apportionable
income during the tax period. Enter the
denominator values in column A of Schedule I.
Page 92019 Montana Form PTE Instructions
Line 3 – Receipts Factor. Receipts mean all gross
receipts of the PTE exclusive of nonapportionable
income and intercompany transactions. The
receipts factor is a fraction. The numerator is the
PTE’s total receipts in Montana during the tax
period. Enter the numerator values in column B
of Schedule I. The denominator is the PTE’s total
receipts everywhere during the tax period. Enter
the denominator values in column A of Schedule I.
Schedule II – Montana PTE Tax
Credits
Credits – Lines 1 through 17
Complete these lines for applicable tax credits,
and include the forms indicated with your tax return
when applicable:
1. Dependent care assistance credit
(Form DCAC)
2. College contribution credit (Form CC)
3. Health insurance for uninsured Montanans credit
(Form HI)
4. Recycle credit (Form RCYL)
5. Alternative energy production credit
(Form AEPC)
6. Contractor’s gross receipts tax credit
7. Alternative fuel credit (Form AFCR)
8. Infrastructure user fee credit (Form IUFC)
9. Historic property preservation credit
(Federal Form 3468)
10. Mineral and coal exploration incentive credit
(Forms MINE-CERT and MINE-CRED)
11. Empowerment zone credit
12. Biodiesel blending and storage credit
(Form BBSC)
13. Innovative educational program credit
14. Student scholarship organization credit
15. Emergency lodging credit (Form ELC)
16. Unlocking public lands credit
17. Apprenticeship tax credit
Credit Recapture – Lines 18 through 20
Complete these lines if the following occurred:
Line 18. The PTE’s federal rehabilitation credit, on
which the Montana historical property preservation
credit was based, was recaptured.
Line 19. The PTE’s biodiesel sales were not at least
2 percent of all diesel sales by the end of the third
year after the credit was initially claimed, or the
facility ceased blending biodiesel for sale.
Line 20. The PTE’s biodiesel facility ceased
operations for a period of 12 consecutive months
within ve years of claiming the credit.
Schedule IV – Montana PTE
Composite Income Tax Schedule
A PTE can elect to le a composite tax return and
pay composite tax on behalf of eligible participants.
If more space is needed, complete additional
copies of Schedule IV (available at MTRevenue.gov
under Forms). We do not accept copies of federal
Schedule K-1, spreadsheets or any other forms in
place of a completed Schedule IV.
If a Schedule IV is not completed, the processing
of the entity’s return will be delayed until we receive
this completed schedule. The return may be subject
to a late ling penalty.
Part I
Enter the number of participants in the composite
income tax return.
Part II
The composite tax ratio is the ratio of the PTE’s
Montana source income to the PTE’s income from
all sources for federal income tax purposes.
Column 1. Enter the amount from Form PTE, line 14.
This is the PTE’s federal income from all sources.
Column 2. Enter the amount from Form PTE, line 20.
This is the PTE’s total Montana source income.
Column 3. Divide column 2 by column 1. The result is
the composite tax ratio. Round to 6 decimal places
and do not enter more than 1.000000.
Part III
Column A – Name of Eligible Participants. List the
name of the participant as it appears on Montana
Schedule K-1.
Column B – Social Security Number (SSN) or
Federal Employer Identication Number (FEIN).
Enter the SSN or FEIN of the participant as it
appears on Montana Schedule K-1.
Column C – Owner’s Share of Federal Income
from Entity. Enter the participant’s share of the
PTE’s total federal income (loss) from all sources.
For the purpose of calculating composite
income tax, divide the participant’s Montana
source income as reported on the owner’s Montana
Schedule K-1, Part 5, line 1, by Form PTE, line 20,
to determine ownership percentage for Montana
composite tax purposes.
Page 102019 Montana Form PTE Instructions
Multiply the percentage by Form PTE, line 14, to
calculate the participant’s share of federal income
for composite tax purposes.
Example:
Participant’s Montana source income
(MT Schedule K-1, Part 5, line 1)
$7,200
Total Montana source income (page 1, line 20) $12,000
Participant’s ownership percentage 60.00%
Total Federal income (page 1, line 14) $100,000
Participant’s Share of Federal Income $60,000
Column D – Standard Deduction. Each eligible
participant is allowed one standard deduction equal
to 20 percent of column C, but not less than $2,090
or more than $4,710.
Column E – Exemption. Each participant is allowed
one exemption of $2,510.
Column F – Calculate Montana Taxable Income.
Subtract the amounts in column D and column E
from column C. Enter the result in this column, but
not less than $0.
Column G – Tax from Tax Table. If the result in
column F is greater than $0, use the tax table at the
bottom of Schedule IV to calculate the tax on the
amount in column F. Enter the result in this column.
Enter $0 if the amount in column F is $0.
Column H – Montana Composite Income Tax
Liability. If the amount in column G is greater
than $0, multiply the amount in column G by the
composite tax ratio from Part II and enter the result.
If the amount in column G is $0, enter $0. This is
the participant’s Montana composite tax liability.
Example: Assume that PTE ABC’s composite tax
ratio is 0.2500 (Part II). Also assume that Owner Y
is an eligible participant in the composite return.
The federal income from all sources is $60,000.
Y’s composite tax liability is calculated in the
following table.
Y’s share of federal PTE income from all sources
(column C)
$60,000
Standard deduction (column D) ($4,710)
Exemption allowance (column E) ($2,510)
Column F (C-D-E) $52,780
“Resident” Tax based on tax table $3,055
Y’s Montana composite income tax (column H) is
$3,055 x 0.2500
$764
Schedule VI – Reporting of
Special Transactions
Mark the appropriate boxes indicating which
forms were led with the IRS or, if the PTE is a
partnership, what type of procedure was used
following an audit by the IRS.
If any statements are answered yes, the entity must
include a copy of the applicable form.
For purposes of statement 8, “related” has the
same meaning given the term in; 26 USC 267(b) or
26 USC 707(b).
Disregarded Entities Owned by
the Pass-Through Entity
TIP - If the PTE is a simple entity,
skip Schedules VII and DE.
Pass-through entities are required to report their
Montana source income from the disregarded
entities they own.
The PTE will report all disregarded entities it owns
on Schedule VII. Schedule DE is required for any
DE with Montana source income from its own
activities. If Form PTE is led late, a late le penalty
applies for each DE reporting Montana source
income on Schedule VII.
Schedule VII – List of Disregarded
Entities
Identify all disregarded entities owned by the PTE
on this schedule.
Column A – Name. Enter the DE’s name, as set forth
in the charter or other legal document creating it.
Note: Each entity is deemed to have the same
mailing address as its owner.
Column B – FEIN. Enter the DE’s federal employer
identication number.
Column C – Montana SOS Registration Number.
Enter the DE’s Montana Secretary of State
registration number. See the instructions on page 3.
Column D – LLC. Mark this box if the DE is a limited
liability company (LLC).
Column E – Q Sub. Indicate if the DE is a qualied
subchapter S subsidiary (Q Sub). If the entity is a
Q Sub, enter its election date in column F.
Column G – DE has Multistate Activities. Mark this
box if the DE has activities in more than one state.
Page 112019 Montana Form PTE Instructions
Column H – DE is a Segment of the PTE. A
segment of a PTE is a DE that holds a function
that is essential to the sourcing of the PTE’s
apportionable income derived from its own
activities. For example, if the purpose of the DE is
to hold property used in the trade or business of
its owner or pay the compensation of employees
involved in the trade or business of its owner, then
the DE is a segment. Mark the box to indicate that
the DE is a segment.
Column I – Montana Source Income from DE’s
Own Activities. Enter the amount of Montana source
income from Schedule DE, line 17 of the Montana
column. If the DE does not have activities of its own,
enter 0 (zero) in the Montana source income box.
Montana source income (loss) from entities that the
disregarded entity owns are not reported in this box.
Schedule DE
TIP - If the PTE is a simple entity,
skip Schedule DE.
Complete a separate schedule for each DE that
the PTE owns that has activities in Montana. This
schedule is used to determine the DE’s Montana
source income derived from the DE’s own activities.
See ARM 42.9.107 for information on sourcing
pass-through entity income.
Montana source income owing through the
disregarded entity is not included in this determination.
A segment’s item of income (loss), deduction and
apportionment are reported on the return of the
DE’s owner. Do not include them on this schedule.
Complete the Everywhere column rst.
Report the name and the FEIN number of the entity
as reported on Schedule VII.
Everywhere column. Report items of income
(loss), and deductions attributable to the DE’s
own activities in the Everywhere column. Report
Montana adjustments to everywhere income on
lines 15 and 16. See the Montana Adjustments
Worksheet instructions on page 11 for information
on Montana adjustments.
If the DE has apportionable income (loss) from
its own activities, mark the box on page 1, line 17
and complete the apportionment factor section
at the bottom of the Everywhere column. See the
instructions for the Schedule I to determine the
DE’s apportionment factor.
Montana column. Add the amount of apportionable
income (loss), deduction, or Montana adjustment
to income with the nonapportionable income
(loss), deduction, or Montana adjustment to
income on each line.
Apportionable income (loss), deduction, or adjustment
is the result of the amount in the Everywhere column
multiplied by the apportionment factor.
Line 17. Report the total amount of Montana source
income on Schedule VII, column G.
Montana Source Income Schedule
TIP - If the PTE is a simple entity,
skip this schedule.
Use this schedule to report the amount of Montana
source income based on the type or character of
the income, loss or deduction from:
● Montana Schedules K-1 received by the entity,
● Schedules DE,
● Montana source income from the PTE’s own
nonapportionable income, and
● Montana source income from the PTE’s own
apportionable income.
Do not include Montana source adjustments from
the Montana Adjustments Worksheet.
Column D – Montana source income from PTE’s
apportionable activities. Use the Apportionable
Income Worksheet on page 16 to calculate your
Montana source income per income type.
Montana Adjustments Worksheet
TIP – If the PTE is a simple entity,
only complete parts 1 and 2, column E.
Use this worksheet to report the adjustments to the
PTE’s income on page 1, Schedule DE, and on any
Montana Schedules K-1 the PTE received. Use the
names and codes found below.
List the name of the adjustment and report the code
that corresponds with the adjustment.
Then report the Montana adjustments to everywhere
income and Montana source income based on
the type (apportionable or nonapportionable) and
origin of the income (Montana Schedule K-1 or
Schedule DE). The adjustments apportioned to
Montana are calculated by multiplying everywhere
adjustments to apportionable income by the
apportionment factor from Schedule I.
Include a copy of this worksheet with
your return.
Page 122019 Montana Form PTE Instructions
Montana Additions – Codes
AA Interest and mutual fund dividend income
that the entity received from bonds and
obligations of another state, territory, or
political subdivision of another state (county,
municipality, district, etc.)
AB State, local, and foreign income taxes based
on income or prots
AC Taxes paid by the S corporation on its federal
Form 1120S that resulted in a reduction of
federal taxable income (e.g., built-in gains tax)
AD Recoveries
AE Addition for dependent care assistance credit
adjustment
AF Farm and ranch risk management account
taxable distributions
AG Title plant depreciation and amortization
AZ Other additions
Montana Subtractions – Codes
Note: Montana subtractions do not include
separately stated deductions that are subjected to
an election or limitation on the owner’s income tax
return (e.g., depletion from oil and gas).
SA Interest on United States government obligations
and mutual fund dividends attributable to that
interest
SB Business-related expenses for purchasing
recycled material
SC Business expenses not deducted due to an
existing federal credit
SD Certain expenses incurred by medical
marijuana providers
SE Sales of land to beginning farmers
SG Certain gains recognized by a liquidating
corporation
SH Farm and ranch risk management account
deposits
SI Donation of mineral exploration information to
the Montana Tech Foundation
SJ Gain on eligible sale of mobile home park
SK Contributions made by a small business to its
independent liability fund
SL Portion of an investment made in a building for
the purpose of conserving energy
Montana Schedule K-1
TIP – If the PTE is a simple entity, only complete
the Everywhere column (column I) in Parts 3 and 4.
Leave the Montana column (column II) blank and
go to Part 5.
Note: These instructions should be used to prepare
the Montana Schedules K-1 for each owner.
For instructions on how the owners report information
received on a Montana Schedule K-1 on their
own return, refer to the owner’s instructions that
accompany the Montana Schedule K-1.
The PTE is required to use the Montana Schedule K-1
to provide information that its owners will need to
complete their Montana income tax return.
Each Montana Schedule K-1 must be an exact
replica of the ocial form. A Montana Schedule K-1
must be completed for each owner regardless if
they held an interest in the PTE only for part of
the year. The PTE is responsible for reporting each
owner’s applicable information on the Montana
Schedule K-1, including if the owner is a participant
in a composite tax return.
The PTE must include a copy of each owner’s
Montana Schedule K-1 when ling Form PTE with
the department. A copy is kept as part of the entity’s
records and each owner is given their own separate
copy (with a copy of the Owner’s Instructions for
Schedule K-1).
If the entity does not include completed copies
of Montana Schedule K-1 for each owner with
Form PTE, the processing of the entity’s return will
be delayed until we receive this information and
late ling penalties may apply.
Part 1 – Pass-Through Entity Information
Mark the applicable boxes:
● Amended Schedule K-1. Mark this box if
the entity is amending the owner’s Montana
Schedule K-1.
● Final Schedule K-1. Mark this box if this is the
last Montana Schedule K-1 that the PTE will
issue to the owner.
Fill in the entity’s Federal Employee Identication
Number (FEIN), name and address.
Page 132019 Montana Form PTE Instructions
Part 2 – Owner Information
Enter the name and address of the owner at
the end of the tax year. Enter the owner’s tax
identication number (FEIN or SSN) as the entity
reported it for federal income tax purposes.
Owner Type. Enter the owner type code for the
owner in the space provided. The owner type codes
applicable to owners of an entity are:
C C corporation
D Disregarded entity
DOM Domestic second-tier pass-through entity
E Estate
F Foreign C corporation
I Individual
P Partnership
PTP Publicly traded partnership
S S corporation
T Trust
TE Tax-exempt entity
Residency. Mark the Resident box only if the owner
is a resident individual, estate, or trust on the last
day of the entity’s tax year. Mark the Nonresident
box only if the owner is a nonresident individual,
estate or trust on the last day of the entity’s tax
year. If residency status is unknown, treat the
owner as a nonresident.
Composite Tax Election. If the owner is a participant
in a composite income tax return led by the entity
(see Schedule IV), mark the box. Participants in a
composite income tax return do not le a Montana
income tax return.
Form PT-AGR. If the owner led a Form PT-AGR
(Pass-Through Entity Owner Tax Agreement) enter
the year that the agreement was provided to the
Department of Revenue. For example, if the entity
or owner led the agreement with the department in
2019, enter “2019.”
For information about Form PT-AGR, see page 14.
Prot/Loss Percentage. Enter each owner’s prot/
loss percentage. The percentage is equal to the prot/
loss percentage reported on each owner’s federal
Schedule K-1. This percentage is used to determine
an owner’s share of mineral royalty or pass-through
withholding paid on behalf of the entity. Round out to
the fourth decimal (example: 25.5555%).
Capital/Ownership Percentage. Enter each owner’s
capital percentage. The percentage is equal to
the percentage reported on each owner’s federal
Schedule K-1. Round out to the fourth decimal
(example: 25.5555%).
Note for Parts 3 and 4: If the owner is
a resident of Montana and an individual (I),
a trust (T), or an estate (E), do not complete
Column II for Parts 3 and 4. When an individual,
estate, or trust is a resident, Montana source
income is the everywhere income.
Part 3 – Montana Adjustments
Montana adjustments can result from the PTE’s
own activities, a DE’s activity or ow-through
income from a lower-tier pass-through entity. Use
Montana Adjustments Worksheet to determine the
total amounts of adjustments you must distribute to
your owners. See Montana Adjustments Worksheet
instructions on page 11.
Partnerships may have special allocations of
income (loss) or deduction.
Line 1 – Montana Additions. Report the owner’s
distributive share of total Montana additions to
everywhere income in the Everywhere column,
line 1. You will nd the total of everywhere Montana
additions on the Montana Adjustments Worksheet,
column E, Part 1.
Report the owner’s distributive share of additions
sourced to Montana in the Montana column.
The total of Montana source additions are reported on
Montana Adjustments Worksheet, column E, Part 3.
Line 2 – Montana Subtractions. Report the owner’s
distributive share of total Montana subtractions
from everywhere income in the Everywhere
column, line 2. The total of everywhere Montana
subtractions on Montana Adjustments Worksheet,
column E, Part 2.
Report the owner’s distributive share of
subtractions sourced to Montana, in the Montana
column, line 2. The total of Montana source
subtractions are reported on Montana Adjustments
Worksheet, Part 4, column E.
Part 4 – Montana Source Income
Owners will need this information to calculate their
tax liability when they le their Montana income
tax returns. If the owner is a resident individual,
estate, or trust, Montana source income equals
the everywhere income, and column II (Montana)
must remain blank.
Page 142019 Montana Form PTE Instructions
Column I – Everywhere. Report the owner’s
distributive share of everywhere income based on
the character of the income (loss) or deduction.
Multiply the amounts reported on page 1,
lines 1 through 13, by the owner’s prot and loss
percentage from Montana Schedule K-1, Part 2.
Report the amounts on the corresponding line.
The owner’s distributive share of page 1, line 13a,
must be reported on Part 4, column I, line 12. The
combined amount of other deductions must be
reported on Part 4, column I, line 13.
If the PTE is a partnership, apply any special
allocation without regard to the owner’s distributive
share of income or loss, and provide a statement
with the Montana Schedule K-1 you send with the
PTE’s return detailing the nature and the amount of
that allocation.
Column II – Montana. Report the owner’s distributive
share of Montana source income based on the
character of the income (loss) or deduction reported
on Montana Source Income Schedule, column E
(see instructions below). For each line on column E,
multiply the amount by the owner’s prot and loss
percentage from Montana Schedule K-1, Part 2.
Otherwise, if the PTE is a partnership, apply any
special allocation of Montana source income
without regard to the owner’s distributive share of
income or loss, and provide a statement with the
Montana Schedule K-1 you send with the PTE’s
return detailing the nature and the amount of that
allocation.
Guaranteed payments. The guaranteed payments
remain with the partner receiving the payment as
reected on the federal Schedule K-1.
Part 5 – Information
Line 1 – Owner’s share of Montana source income
(loss). Do not calculate this total for resident
individual, trust and estate owners.
Enter the total of each owner’s distributive share of
Montana source income (loss). Calculate the total
using the amounts found in the Montana column,
using the following formula:
Add:
Part 3, line 1
Part 4, lines 1-11
Subtract:
Part 3, line 2
Part 4, lines 12 and 13
Total Montana Source Income
Line 2 – Composite Income Tax Paid on Behalf of
Owner. Enter the amount of Montana composite
income tax paid on the owner’s behalf. This amount
is calculated for each owner on Schedule IV.
Line 3a – Montana income tax withheld on behalf
of owner. If the owner is a participant in the entity’s
composite return, pass-through withholding does
not apply, enter 0 (zero) and go to line 4.
Otherwise, if the PTE has an owner who is
a nonresident individual, nonresident estate,
nonresident trust, foreign C corporation,
tax-exempt entity, or second-tier pass-through
entity at any time during the year, the PTE must
pay pass-through withholding on behalf of the
owner if the owner has more than $1,000 of
Montana source income on line 1.
Exemption through agreement. In the case of an
owner that is a nonresident individual, nonresident
estate, nonresident trust, foreign C corporation, or
tax-exempt entity, withholding is not required if the
owner has a valid Form PT-AGR on le. See the
Form PT-AGR instructions for more information.
In the case of a second-tier pass-through entity
owner, withholding is not required if the second-
tier entity is a domestic second-tier pass-through
entity. A domestic second-tier pass-through
entity is a pass-through entity, with a Form PT-
AGR on le, whose interest is entirely held,
either directly or indirectly, by any combination of
resident individuals, estates, trusts, domestic C
corporations, or any other entities, organizations,
or accounts whose principal place of business or
administration is located in the state of Montana.
If the owner was not compliant with their tax ling
and payment obligations, and the PTE was notied
that it must withhold tax on behalf of the owner, the
Form PT-AGR is not valid and withholding is required.
If line 1 is more than $1,000 and there is not a
valid Form PT-AGR on le, enter the amount of
withholding the PTE must pay on behalf of the
owner. For nonresident individuals, estates, trusts,
and second-tier pass-through entities, the amount
required to be withheld is 6.9 percent of the owner’s
distributive share of Montana source income
reported on line 1. For a foreign C corporation or
tax-exempt entity, the amount is 6.75 percent of
the owner’s distributive share of Montana source
income reported in line 1.
Page 152019 Montana Form PTE Instructions
Line 3b – Montana income tax withheld by a
lower-tier pass-through entity. If line 3a is zero
enter the lesser of:
● The owner’s Montana source income on line 1
multiplied by 6.9 percent, or
● The owner’s Prot/Loss Percentage reported
in Part 2, multiplied by the amount on
Form PTE, line 24a.
Line 4 – Montana mineral royalty tax withheld.
If lines 2 and 3a are zero and the PTE received a
federal Form 1099 because the PTE had Montana
mineral royalty tax withheld from its mineral royalty
income in Montana, enter the owner’s pro rata
share of the amount withheld on this line.
Determine the owner’s pro rata share of the
amount withheld by multiplying the amount on
Form PTE, line 23a, by the owner’s prot/loss
percentage in Part 2.
Line 5 – Other information. Enter each owner’s
distributive share of items other than those listed
on lines 2 through 5 that are necessary to le the
owner’s Montana income tax return. List the type
of item on this line. If additional space is needed,
include a detailed statement.
If the PTE made a contribution that meets the
requirements for the Montana qualied endowment
credit, report the amount of contribution distributed
to the owner on this line.
Part 6 – Montana Tax Credits and Recapture
Line 1 – Contractor’s gross receipts tax credit.
Enter each owner’s distributive share of the
contractor’s gross receipts (CGR) tax credit. Also
enter the CGR Account ID number on this line.
The PTE received the CGR Account ID when it
registered with the Department of Revenue. If
the owner does not have the CGR Account ID
number on record, contact us. If the owner receives
credit from more than one CGR account, mark
the box indicating multiple accounts and include a
statement detailing how much credit each owner
receives from each CGR account.
Line 2 – Other credit/recapture information. Enter
each owner’s distributive share of tax credits and
tax credit recapture amounts that were not reported
on Part 6, line 1.
These tax credits and tax credit recapture amounts
are reported on Schedule II. If you need additional
space, include a schedule.
Part 7 – Montana Adjustments Detail
Use this section to report the detail of the owner’s
distributive share of Montana adjustments on
Part 3, lines 1 and 2.
Report the code corresponding to each adjustment.
The code for each adjustment starts with a number,
which is the number of the column where the
adjustment is reported on Montana Schedule K-1
(1 for the Everywhere column or 2 for the Montana
column), and is followed by two letters associated
with the adjustment. (See below).
Example: A PTE reports an addition on the
Montana Adjustments Worksheet with the
code AB. The owner’s distributive share of the
everywhere AB addition is $1,000, and the
Montana distributive share of this addition is $500.
The PTE reports two entries in Part 7:
● A rst entry of $1,000 with code 1AB
● A second entry of $500 with code 2AB
A B (line 16b) C (line 16c) D (line 16d) E F G
Federal
Schedule K
Federal
Schedules K-1
Disregarded
entities
Nonapportionable
income
Apportionable
Income
(A-B-C-D)
Apportionment
factor from
Schedule I, line 5
Income
apportioned
to Montana (E x F)
1
Ordinary business
income (loss)
2
Net rental real estate
income (loss)
3
Other net rental
income (loss)
4
Guaranteed payments
5
Interest income
6
Ordinary dividends
7
Royalties
8
Net short-term
capital gain (loss)
9
Net long-term
capital gain (loss)
10
Net §1231 gain (loss)
11
Other income (loss).
12
§179 expense deduction
apportionable and/or allocable
to Montana
13
Other expense deductions
apportionable and/or allocable
to Montana
14
Total
Apportionable Income Worksheet
Use this worksheet to segregate the PTE’s income per income type for lines 16b, 16c, and 16d, and determine the PTE’s income that is
apportioned to Montana (column G) before adjustments. The PTE must include the amounts from column G on the Montana Source Income
Schedule, column D. If you are a simple entity, you do not need to use this worksheet.
