Fillable Form Qec - Qualified Endowment Credit

to the cost of replacing the policy with a single premium

by the pass-through entity. You will also need to enter the

life insurance policy at the donor’s current age.

pass-through entity’s business name and federal employer

identiﬁ cation number (FEIN) in the space provided.

For the following two annuities to qualify for a charitable

deduction or the qualiﬁ ed endowment credit, these

Line 6. The percentage of credit you can receive for your

annuities have to be given to a charitable organization that

contribution is based on whether it was a planned gift or an

has met the following requirements at the time the annuity

outright gift.

is issued:

The credit allowed against corporation license tax or

●

Have a minimum of $300,000 net worth or a

income tax liability for a contribution of a planned gift is

minimum $100,000 in unrestricted cash, cash

40% of the present value of the allowable contribution.

equivalent or public traded securities;

The credit allowed against corporation license tax or

●

Have been in business for at least three years;

income tax liability for a direct contribution is equal to 20%

of the charitable contribution.

●

Have one-half of the outstanding annuity

maintained in a separate annuity fund.

Line 7. Multiply the amount on line 5 by the percentage on

line 6. Do not enter more than $10,000.

If the above requirements are not met, the gift annuity must

be commercially insured by a licensed insurance company

Please note the following limitations on the qualiﬁ ed

qualiﬁ ed to do business in Montana.

endowment credit:

●

Charitable gift annuity. This is the transfer of cash

The maximum credit that may be claimed by a

or property to a charity in exchange for the charity’s

taxpayer for contributions made from all sources in

promise to pay the donor and, if applicable, the

a year is $10,000.

surviving annuitant, a lifetime annuity. This type of

●

The credit may not exceed the taxpayer’s income

annuity is considered a bargain sale that results in

tax liability.

part taxable gain and a charitable deduction. The

●

annuity agreement must provide that the interest of the

There is no carryback or carryforward of the credit.

annuitant(s) in the gift annuity may not be assigned

●

The credit must be applied to the tax year in which

to the qualiﬁ ed endowment sooner than the earlier

the contribution is made.

of the date of death of the annuitant(s) or ﬁ ve years

after the date of the contribution. The charitable

To learn more about the endowments state-wide, visit the

organization issuing the annuity must also meet

Governor’s Task Force on Endowed Philanthropy website

additional requirements imposed in 33-20-701, MCA

that are administered by the Montana Commissioner of

Administrative Rules of Montana: 42.4.2701 through

Insurance.

42.4.2708

Deferred charitable gift annuity. This is an annuity in

Questions? Please call us toll free at (866) 859-2254 (in

which payments to the donor do not begin until a future

Helena, 444-6900).

date. Deferred charitable gift annuities are subject to

the same requirements as charitable gift annuities.

In addition, the ﬁ rst partial or full-year payment of the

annuity has to begin within the life expectancy of the

annuitant or of the joint life expectancies of multiple

annuitants, and the annuity rate to be paid must be at

least 5%.

Part II. Credit Calculation

If the gift you are claiming the credit for was a planned

gift, complete Column A. If it was an outright gift, complete

Column B. Do not complete both columns.

Line 5. Enter the present value of the aggregate amount

of the charitable gift portion of your planned gift, or your

outright charitable contribution (the charitable deduction

amount) in the corresponding column.

If you are an individual and are not receiving the credit from

a pass-through entity, you should only complete column A.

In this situation, only the contributions you make in the form

of a planned gift qualify for the credit.

If you are receiving the credit from a pass-through entity,

enter your distributable share of the contribution made

Form Qec - Qualified Endowment Credit - 2013 Page 4

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