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

General Instructions

Part 4 – Nonresident Partner/Shareholder Only—Montana Source

Income (Loss)

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

If you are a nonresident individual, estate, trust, or pass-through entity,

or shareholders. Parts 1 and 2 are completed for all partners or

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

shareholders. Parts 3, 5 and 6 are completed for all partners or

other additions to income are shown. Transfer these amounts to the

shareholders only if there is applicable information. Part 4 applies to

appropriate Montana tax return.

nonresident partners or shareholders only.

4. Guaranteed payments. The guaranteed payments remain with the

Purpose of Montana Schedule K-1

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

Montana Schedule K-1 shows information about your share of income,

Part 5 – Supplemental Information

gains, losses, deductions, credits and other items from an S corporation,

a partnership, or a limited liability company (LLC) that is treated as an

Supplemental information which could result in adjustments to the

S corporation or partnership for income tax purposes. If applicable,

Montana tax return is listed. Transfer the information to the appropriate

your share of “Montana source income” is listed. You may need this

Montana tax return.

information to complete the appropriate Montana tax return.

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 ﬁ le your own Montana

of the entity’s Montana statutory adjustments or tax credits that may

tax return. This is for your information only.

affect the preparation of your Montana tax return.

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

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

The entity was required to withhold Montana income tax for those

a Montana resident individual, estate, or trust, you report to Montana

nonresident partners/shareholders who did not ﬁ le a consent agreement

your entire share of the entity’s income, gains, losses, and deductions

or statement (Form PT-AGR) and did not elect to have the entity

included in your federal taxable income. The Montana Schedule K-1

pay composite income tax. Transfer the amount from this line to the

shows your share of the entity’s Montana statutory adjustments or tax

appropriate Montana tax return.

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

3. Premiums for Insure Montana Small Business Health Insurance

Nonresident individual, estate, or trust partner/shareholder. If you

credit. If the entity received a tax credit from the Insure Montana Small

are a nonresident individual, estate, or trust, the amount of your share of

Business Health Insurance program, the amount entered is the portion

the entity’s income, gains, losses, and deductions that are apportioned

of the premiums paid for these policies which is not allowed as a

and allocated to Montana based on the entity’s activity in Montana is

deduction.

used to determine your Montana tax liability. These items are shown

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

in Part 4 of the Montana Schedule K-1. Unless you are a nonresident

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

individual who elected to participate in a composite return ﬁ led on your

the royalty payments made to the owners are subject to withholding if

behalf by the entity, you need to ﬁ le a Montana tax return to determine

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

your tax liability for these items.

the withheld mineral royalty tax to the partner or shareholder, the amount

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

attributed is listed. This withholding should not be confused with the

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

amounts deducted from royalty payments for production taxes. Transfer

in a composite return ﬁ led on your behalf by the entity, you are not

the amount on this line to the appropriate Montana tax return.

required to ﬁ le a Montana tax return. If this applies to you, you received

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

the Montana Schedule K-1 to show your share of these items and the

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

composite tax paid on your behalf.

attributable to its partners/shareholders generally using the same

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

proportion that is used to report that entity’s income or loss for Montana

amended Montana Schedule K-1 from the entity, and you previously ﬁ led

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

a Montana tax return, you need to ﬁ le an amended Montana tax return to

composite tax. We have listed the most common tax credits along with

report the changes in income, gains, losses and deductions.

space to provide information about any other tax credit or recapture

Montana Schedule K-1, Parts 3-6

amount. Include the amount from this schedule on the applicable credit

form and report on the appropriate Montana tax return.

Part 3 – All Partners/Shareholders – Montana Adjustments

Some tax credits have provisions requiring a recapture of the tax

A-B. Montana Additions or Deductions

beneﬁ t you received in an earlier tax year (if you do not meet certain

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

requirements in subsequent tax years). If you are required to report a

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

recapture, include the amount from this schedule on the appropriate

detailed schedule is required to be included. The form shows a partial

Montana tax return.

list. Any amounts listed are the partner’s or shareholder’s share of

Montana additions and deductions from the corresponding lines on

Schedules A and B. Transfer the amount(s) shown to the appropriate

Montana tax return.

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

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