QEC: Qualified Endowment Credit (2024)
Montana · Montana DOR · Used for tax years 2024
Montana Form QEC is used to claim the 2024 Qualified Endowment Credit. It records details of a qualifying charitable gift and calculates the credit for a planned gift or an outright contribution.
Who files this form
Use Form QEC to claim Montana’s qualified endowment credit. Complete a separate form for each qualifying gift.
- Individuals: Your own contributions qualify only if they are planned gifts. You may also receive qualifying contributions passed through from an entity.
- C corporations engaged in an active trade or business: Qualifying gifts may be planned gifts or outright contributions.
- Estates and trusts: Qualifying gifts may be planned gifts or outright contributions. Unused credit may be attributed to beneficiaries as described in the form’s instructions.
- Partnerships, S corporations, and limited liability companies: Do not complete Form QEC. Pass contributions through to owners in the same proportion used to report the entity’s income or loss for Montana tax purposes, and report them on Montana Schedule K-1 (PTE), Part 5, line 5.
Married couples filing jointly must complete a form for each spouse’s qualifying gift.
What you'll need
You must include a contribution receipt with Form QEC. It must come from the organization holding the qualified endowment, the trustee administering the planned gift, or the Montana bank or trust company holding the endowment.
The receipt must show:
- The allowable contribution amount.
- The date the contribution or planned gift was made.
- Confirmation that the contribution was placed in a permanent irrevocable fund.
- The name of the Montana organization holding the endowment, or the tax-exempt organization on whose behalf it is held.
- A description of the gift type.
If a charitable trust has not yet named the charity, also include a copy of the trust’s disposition clause showing that a qualified endowment fund has been created.
Have the recipient’s name and address available. If the contribution came through a pass-through entity, you also need your share of the contribution, the entity’s business name, and its Federal Employer Identification Number (FEIN).
How to file
- Enter your name as it appears on your Montana tax return and your FEIN or Social Security number.
- Complete Part I with the receipt information, contribution date, and the name and address of the organization, trustee, bank, or trust company. Select only one recipient category. For a planned gift, select the gift type on line 4.
- Complete only one column in Part II: Column A for a planned gift or Column B for an outright gift.
- On line 5, enter the charitable deduction amount described on the form. For a pass-through contribution, enter your share and the entity’s name and FEIN.
- Multiply line 5 by 40% for a planned gift or 20% for an outright gift. Do not enter more than $15,000 on line 7.
Paper returns: Include a copy of Form QEC and the receipt with your income tax return. If you have multiple qualifying gifts, complete a separate Form QEC for each and combine the credits on your return, subject to the applicable limits.
The supplied text does not provide a mailing address or e-file instructions.
Common mistakes
- Leaving out the receipt: The form requires a contribution receipt. If you mark “No” on line 1, explain why.
- Completing both calculation columns: Use only Column A for planned gifts or Column B for outright gifts. Individuals not receiving the credit through a pass-through entity should use only Column A.
- Using one form for several gifts: Complete a separate Form QEC for each gift.
- Claiming both a credit and a deduction for the same amount: The contribution amount used to calculate the credit cannot also be claimed as a charitable deduction on your Montana return.
- Exceeding the limits: An individual’s total credit from all sources is limited to $15,000, subject to the special joint-filing rules. The credit cannot exceed income tax liability.
- Moving the credit to another year: There is no carryback or carryforward. Apply the credit to the tax year in which the contribution was made.
Questions people ask
What is a qualified endowment?
It is a permanent, irrevocable fund established for a specific charitable, religious, educational, or philanthropic purpose. It must be held by a Montana tax-exempt 501(c)(3) corporation, or by a bank or trust company on behalf of a Montana or foreign 501(c)(3) organization. A building fund whose contributions will be spent is not a permanent irrevocable fund.
How much is the credit?
The credit is 40% of the present value of the charitable gift portion of a qualifying planned gift, or 20% of a qualifying outright contribution. An individual’s maximum total credit is $15,000. A C corporation’s credit is limited to the lesser of its corporate income tax liability or $15,000. The maximum for an estate or trust is $15,000. The credit cannot exceed the taxpayer’s income tax liability.
Can a married couple filing jointly claim more than $15,000?
Yes. A couple may claim up to $30,000 if both spouses separately make qualifying gifts. The instructions also allow up to $30,000 on Form 2 if each spouse separately receives a pass-through credit in the same proportion used to report the entity’s income or loss for Montana tax purposes.
Can I deduct any part of a gift used for this credit?
You cannot claim a Montana charitable deduction for the contribution amount used to calculate the credit. You may deduct the portion not used to calculate the credit.
What if I recover my charitable gift?
If you recover the gift in the current year, include the amount previously deducted as income to the extent it reduced your individual or corporate income tax. You must also increase tax due by the credit previously allowed.