Senate Bill No. 388
Introduced By _______________________________________________________________________________
A Bill for an Act entitled: "An Act exempting lottery winnings received by a nonprofit corporation from the corporation license tax; amending section
15-31-102, 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 15-31-102, MCA, is amended to read:
"15-31-102. Organizations exempt from tax -- unrelated business income not exempt. (1) Except as provided in
there shall not be taxed under this title any the income received by any the following organizations is
exempt from taxation:
(a) a labor, agricultural, or horticultural organization;
(b) a fraternal beneficiary, society, order, or association operating under the lodge system or for the exclusive benefit of the
members of a fraternity itself operating under the lodge system and providing for the payment of life, sick, accident, or
other benefits to the members of
such the society, order, or association or their dependents;
(c) a cemetery company owned and operated exclusively for the benefit of its members;
(d) a corporation or association organized and operated exclusively for religious, charitable, scientific, or educational
no part of the net income of which inures does not inure to the benefit of any private stockholder or individual;
(e) a nonprofit business league, chamber of commerce, or board of trade,
not organized for profit and no part of the net
income of which inures does not inure to the benefit of any private stockholder or individual;
(f) a nonprofit civic league or organization
not organized for profit but operated exclusively for the promotion of social
(g) a club organized and operated exclusively for pleasure, recreation, and other nonprofitable purposes,
no part of the net
income of which inures does not inure to the benefit of any private stockholder or members member;
(h) a farmers' or other mutual hail, cyclone, or fire insurance company, mutual ditch or irrigation company, mutual or cooperative telephone company, or like organization of a purely local character, the income of which consists solely of assessments, dues, and fees collected from members for the sole purpose of meeting its expenses;
(i) a cooperative association or corporation engaged in the business of operating a rural electrification system or systems for the transmission or distribution of electrical energy on a cooperative basis;
corporations corporation or associations association organized for the exclusive purpose of holding title to property,
collecting income therefrom from the property, and turning over the entire amount thereof of the income, less expenses, to
an organization which itself that is also exempt from the tax imposed by this title;
(k) a wool and sheep
pool, which is an association owned and operated by agricultural producers organized to market
association members' wool and sheep, the income of which consists solely of assessments, dues, and fees collected from
members for the sole purpose of meeting its expenses. Income, for this purpose, does not include expenses and money
distributed to members contributing wool and sheep ;.
(l) a corporation that qualifies as a domestic international sales corporation (DISC) under the provisions of section 991, et
seq., of the Internal Revenue Code and that has in effect for the entire taxable year a valid election under federal law to be
treated as a DISC. If a corporation makes
such an election under federal law, each person who at any time is a shareholder
of such the corporation is subject to taxation under Title 15, chapter 30, on the earnings and profits of this DISC in the
same manner as provided by federal law for all periods for which the election is effective.
(m) a nonprofit farmers' market association
not organized for profit and no part of the net income of which inures to the
benefit of any member, but is organized for the sole purpose of providing for retail distribution of homegrown vegetables,
handicrafts, and other products either grown or manufactured by the seller. For the purposes of this section, the net income
of the association may not inure to the benefit of any member of the association.
In determining the license fee to be paid under this part, there shall not be included any For the purposes of this title,
income does not include the earnings derived from any by a public utility managed or operated by any a subdivision of the
state or the earnings derived from the exercise of any governmental function.
Any Except as provided in subsection (3)(b), any unrelated business income, as defined by section 512 of the
Internal Revenue Code , of 1954, as amended, earned by any an exempt corporation resulting in a federal unrelated business
income tax liability of more than $100 shall be is taxed as other corporation income is taxed under this title. An exempt
corporation subject to taxation on unrelated business income under this section must shall file a copy of its federal exempt
organization business income tax return on which it reports its unrelated business income with the department of revenue.
(b) Winnings received by an exempt corporation from a lottery game operated pursuant to Title 23, chapter 7, are not subject to tax. To qualify for the exemption under this subsection (3)(b), the use of the winnings must be related to the purpose for which the corporation received its exemption."
NEW SECTION. Section 2. Effective date. [This act] is effective on passage and approval and applies retroactively, within the meaning of 1-2-109, to tax years beginning after December 31, 1996.