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Owner’s Instructions for Montana Schedule K-1 (Forms CLT-4S and PR-1)

General Instructions

The portion of the guaranteed payments that represent Montana source

income are reported on this line.

The Montana Schedule K-1 is required to be provided to all owners.

►Part 5 – Supplemental Information

The federal Schedule K-1 cannot serve as a substitute for the Montana

Schedule K-1. Montana Schedule K-1 shows information about an owner’s

This lists supplemental information which could result in adjustments to

share of income, gains, losses, deductions, credits and other items from a

the Montana tax return.

pass-through entity.

1. Montana composite income tax paid on behalf of partner/

Partnership or corporation partner/shareholder. If you are a

shareholder. If applicable, the amount shown on this line is the amount

corporation, partnership, or a limited liability company treated like a

of Montana composite income tax paid on your behalf by the entity. If

corporation or partnership, the Montana Schedule K-1 shows your share

you made this election, you are not required to file your own Montana tax

of Montana source income and Montana statutory adjustments from the

return. This is for your information only.

entity that may affect the preparation of your Montana tax return.

2. Montana income tax withheld on behalf of partner/shareholder. The

Resident individual, estate, or trust partner/shareholder. If you are

entity was required to withhold Montana income tax for those nonresident

a Montana resident individual, estate, or trust, your entire share of the

owners who did not file a consent agreement (Form PT-AGR) and did not

entity’s income, gains, losses, and deductions that is includable in your

elect to participate in a composite return.

federal taxable income is Montana source income. The Montana Schedule

3. Montana mineral royalty tax withheld. If mineral rights are held by

K-1 shows your share of Montana source income and Montana statutory

a partnership or S corporation in which you have an ownership interest,

adjustments from the entity that may affect the preparation of your

the royalty payments made to the owners may be subject to withholding

Montana tax return.

if certain thresholds are met. If the partnership or S corporation attributed

Nonresident or part-year resident individual, estate, or trust partner/

the withheld mineral royalty tax to you, the amount attributed is listed.

shareholder. If you are a nonresident or part-year resident individual,

This withholding should not be confused with the amounts deducted from

estate, or trust, the amount of your share of the entity’s income, gains,

royalty payments for production taxes.

losses, and deductions that are apportioned and allocated to Montana

4. Separately stated allocable nonbusiness items. This line is for

based on the entity’s activity in Montana is used to determine your

reporting all amounts that are allocable to Montana from nonbusiness

Montana tax liability. Your share of Montana source income and Montana

activities.

statutory adjustments are reported to you on the Montana Schedule K-1.

You need your Montana Schedule K-1 to determine your tax liability on

5. Other information. This line lists supplemental information that could

your Montana tax return unless you are a nonresident who elected to

result in adjustments to your Montana tax return. If all of the supplemental

participate in a composite return.

information could not be listed on this line, the entity should provide you

with a statement showing the additional information. Additional information

Composite return election. If you are a nonresident individual, estate

may include items that you can use to calculate a tax credit. An example

or trust, a foreign C corporation, or a pass-through entity who elected to

of an item that can be used to calculate a tax credit is a contribution that

participate in a composite return filed on your behalf by the entity, you

qualifies for a qualified endowment credit. If a portion of the contribution is

are not required to file a Montana tax return. If this applies to you, you

distributed to you, the amount will be reported on this line.

received the Montana Schedule K-1 to show your share of tax items the

entity reported and the composite tax paid on your behalf.

►Part 6 – Montana Tax Credits and Recapture (If Applicable)

Amended Schedule K-1 (Forms CLT-4S and PR-1). If you received an

Any credit claimed by a partnership or S corporation has to be attributable

amended Montana Schedule K-1 from the entity, you may need to file

to its owners generally using the same proportion that is used to report

an amended Montana tax return to report the changes in income, gains,

your share of that entity’s income or loss for Montana income tax

losses and deductions.

purposes. The tax credits cannot be taken as a credit against composite

tax. The form includes the most common tax credits along with space to

Montana Schedule K-1, Parts 3-6

provide information about any other tax credit or recapture amount.

►Part 3 – Montana Adjustments

1. Contractor’s gross receipts tax credit. If the entity received a tax

A-B. Montana Additions and Deductions

credit for contractor’s gross receipts, the CGR Account ID will be entered

into the space provided and the amount entered on line 1 is your portion

To compute Montana income taxable to pass-through entity owners,

of the credit. If credit amounts from multiple CGR accounts are passing

certain items have to be added to income or deducted from income. The

through to you, a schedule included with your Montana Schedule K-1

amounts listed are your share of Montana additions and deductions.

identifies how much credit passes through to you from each CGR account.

If you are an individual, estate or trust these amounts are reported as

adjustments to federal adjusted gross income to determine Montana

3. Other credit/recapture information. Some tax credits have provisions

adjusted gross income as reported on your Montana income tax return.

requiring a recapture of the tax benefit you received in an earlier tax year

(if you do not meet certain requirements in subsequent tax years).

►Part 4 – Distributive Share of Montana Source

Income (Loss)

Your share of the entity’s Montana source income, gains, losses and other

additions and deductions to federal taxable income are shown.

4. Guaranteed payments. The guaranteed payments remain with the

partner receiving the payments as reflected on the federal Schedule K-1.

Form Clt-4s And Pr-1 Draft - Montana Schedule K-1 - Partner'S/shareholder'S Share Of Income (Loss), Deductions, Credits, Etc. - 2016, Form Fid-3 Draft - Montana Schedule K-1 - Beneficiary'S Share Of Income (Loss), Deductions, Credits, Etc. - 2016 Page 2

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