Fillable Montana Form Qec Draft - Qualified Endowment Credit

• Charitable lead annuity trust. This is a trust in which

• Deferred charitable gift annuity. This is an annuity in

property is transferred and invested by the trustee who

which payments to the donor do not begin until a future

each year pays a fixed dollar amount to the charity for a

date. Deferred charitable gift annuities are subject to

term of years or lifetime(s), with the remainder interest

the same requirements as charitable gift annuities. In

then transferring to private beneficiaries named by the

addition, the payment of the annuity has to begin within

donor.

the life expectancy of the annuitant or of the joint life

expectancies of multiple annuitants.

For the following two annuities to qualify for a charitable

deduction or the qualified endowment credit, these

• Charitable life estate agreement. This is a gift to

annuities have to be given to a charitable organization

a charity of a personal residence that is subject to a

that have met the following requirements at the time the

reserved life estate.

annuity is issued:

• Paid-up life insurance policy. This is a life insurance

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

policy in which all the premiums have been paid that

$100,000 in unrestricted cash, cash equivalent or

usually entitles the donor to a current deduction equal to

public traded securities;

the cost of replacing the policy with a single premium life

insurance policy at the donor’s current age.

• Have been in business for at least three years;

If I claim the qualified endowment credit, can I also take

• Have one-half of the outstanding annuity maintained

a charitable deduction for the amount of the gift?

in a separate annuity fund.

No. The amount of your contribution that is used to

If the above requirements are not met, the gift annuity

calculate your qualified endowment credit cannot also be

must be commercially insured by a licensed insurance

claimed as a charitable contribution on your Montana tax

company qualified to do business in Montana.

return. You can claim a charitable deduction for that portion

• Charitable gift annuity. This is the transfer of cash

of the contribution not used to calculate this credit.

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

What happens if I recover my charitable gift this year?

promise to pay the donor and, if applicable, the surviving

annuitant, a lifetime annuity. This type of annuity is

If a charitable gift is recovered in the current year, you will

considered a bargain sale that results in part taxable

have to include as income the amount previously deducted,

gain and a charitable deduction. The annuity agreement

to the extent it reduced your individual income tax or

must provide that the interest of the annuitant(s) in

corporation license tax, and increase the amount of tax due

the gift annuity may not be assigned to the qualified

by the amount of the credit previously allowed.

endowment sooner than the earlier of the date of death

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

of the annuitant(s) or five years after the date of the

Governor’s Task Force on Endowed Philanthropy website

contribution. The charitable organization issuing the

annuity must also meet additional requirements imposed

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

in 33-20-701, MCA, that are administered by the

Helena, 444-6900).

Montana Commissioner of Insurance.

Montana Form Qec Draft - Qualified Endowment Credit - 2011 Page 3

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