SENATE BILL NO. 2
INTRODUCED BY E. STONINGTON
BY REQUEST OF THE REVENUE AND TAXATION INTERIM COMMITTEE
A BILL FOR AN ACT ENTITLED: "AN ACT ALLOWING A RESIDENT TAXPAYER A CREDIT FOR TAXES PAID IN ANOTHER STATE OR COUNTRY FOR THE TAXPAYER'S PRO RATA SHARE OF INCOME TAXES PAID BY AN S. CORPORATION IN ANOTHER STATE OR COUNTRY; AMENDING SECTION 15-30-124, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND A RETROACTIVE APPLICABILITY DATE."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 15-30-124, MCA, is amended to read:
"15-30-124. Credit allowed resident taxpayers for income taxes imposed by foreign states or countries. (1)
Subject to the following conditions provided in subsections (2) through (5), residents a resident of this state shall be is
allowed a credit against the taxes imposed by this chapter for:
(a) income taxes imposed by and paid to another state or country on income taxable under this chapter:; and
(b) the resident's pro rata share of any income tax imposed by and paid to another state or country by an S. corporation of which the resident is a shareholder.
(1)(2) The credit shall be is allowed only for taxes paid to such other another state or country on income derived from
sources within such the other state or country which that is taxable under the laws of such the other state or country
irrespective regardless of the residence or domicile of the recipient taxpayer.
(2)(3) The credit shall is not be allowed if such the other state or country allows residents of this state a credit against
the taxes imposed by such the other state or country for taxes paid or payable under this chapter.
(3)(4) The allowable credit shall must be computed by a formula to be prescribed by the department.
(5) For the purposes of the credit under subsection (1)(b):
(a) "income tax" has the same meaning as provided by Article II of 15-1-601;
(b) the S. corporation must have made and have in effect on the last day of its tax year a valid election under subchapter S. of Chapter 1 of the Internal Revenue Code; and
(c) the credit applies only to taxes paid by the S. corporation on income taxable under this chapter."
NEW SECTION. Section 2. Effective date. [This act] is effective on passage and approval.
NEW SECTION. Section 3. Retroactive applicability. [This act] applies retroactively, within the meaning of 1-2-109, to tax years beginning after December 31, 1996.
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