1. (1) The tax on net long-term capital gains recognized by nonresidents equals the tax on them, calculated under 15-30-2103(2), MCA, multiplied by the ratio of net long-term capital gains sourced to Montana under 15-30-2104, MCA, to the total net long-term capital gains from all sources.
2. (2) When net long-term capital gains are recognized by a nonresident taxpayer, the amounts of net long-term capital gains must be excluded from the numerator and the denominator of the ratio provided under 15-30-2104, MCA, to calculate the tax under 15-30-2103(2), MCA.

3. (3) Informational examples regarding net long-term capital gains administered under this rule are as follows:

   1. (a) Married nonresident taxpayers filing jointly in 2024 recognize a net taxable loss of ($100,000) and a net long-term capital gain of $50,000 which is sourced to Montana. Even though the Montana source income is positive, their tax liability is zero because the total taxable income is zero and 15-30-2103(1), MCA, does not create a separate tax on net long-term capital gains.
   2. (b) Assuming the same taxpayers as in (a), except that they recognize a net taxable income of $71,000, comprised of $21,000 in ordinary income and $50,000 in net long-term capital gains. The first tax rate applied is the tax on ordinary income which is 4.7 percent. The lower capital gains rate under 15-30-2103(2), MCA, is applied to the first $20,000 of capital gains with the remaining $30,000 subject to the upper rate.
   3. (c) Assuming the same taxpayers as in (a) and (b) except income is $40,000 of the net long-term capital gains sourced to Montana, $7,000 of the nonqualified taxable income sourced to Montana and the ratio of Montana net long-term capital gains to capital gains from all sources is 0.80. The nonresident tax under 15-30-2103(2), MCA, equals $1,464 [$1,830 x 0.8]. The nonresident ratio applied against the tax on the remaining nonqualified income is one-third. The nonresident tax on nonqualified taxable income is $329 [($21k x 0.047) x 0.333]. The total tax for the nonresident is $1,793.

Authorizing statute(s): 15-1-201, MCA

Implementing statute(s): 15-30-2103, 15-30-2104, MCA

History: NEW, 2025 MAR, 42-1088, Eff. 1/25/25.