Other Additions

• Passive and Rental Income and Losses

  If you filed a joint federal return and are filing a separate Montana return, you must recompute allowable passive activity losses according to the federal passive activity rules for married filing separate status.

  For each spouse, complete and attach federal Form 8582, Passive Activity Loss Limitations, using married filing separate rules to determine your allowable passive activity losses for Montana. Enter the difference between the passive losses reported on Form 2, Line 12 under married filing joint rules and the allowable passive losses computed on Form 8582 under married filing separate rules here. The unallowed losses added back on are carried forward to the following year or years until used.

  The special allowance for losses from rental real estate activities in which you actively participate, which is allowable if you file a joint return, is disallowed if you file married filing separately and you lived with your spouse at any time during the year.

  For additional passive activity information, please refer to IRS Publication 925, Passive Activity and At-Risk Rules.

• Independent Liability Funds

  If you received a distribution of principal from an independent liability fund, you must report the amounts received if you previously took a deduction for the contribution.

• Montana Net Operating Losses

  Use Form NOL-99 for calculating your net operating loss for tax years beginning after December 31, 1998. You must carry-back the entire amount of a 2003 net operating loss to the two tax years before the net operating loss unless you have timely elected to forgo the two year carry-back and elect to carry-forward the NOL. The election must be made by the due date of the return and once it is made it is irrevocable.

  Use Form NOL for calculating your net operating losses for the years prior to January 1, 1999. Complete the Montana Net Operating Loss Worksheets and retain for your records.

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