RCYL: Recycle Credit/Deduction (2024)
Montana · Montana DOR · Used for tax years 2024
Montana Form RCYL calculates the recycle credit for qualifying machinery and equipment and the additional deduction for purchases of recycled material. It also reports a partner’s or S corporation shareholder’s share of the recycle credit.
Who files this form
Form RCYL is used to claim Montana's recycle credit or deduction. The credit is available to qualifying individuals, C corporations, S corporations, and partnerships. Partners and S corporation shareholders use Part I to report their share of a credit.
For the equipment credit:
- The equipment must be purchased on or after the first day of the current tax year and before the last day of that tax year.
- It must be located and operating in Montana on the last day of the tax year.
- It must be used primarily for qualifying collection or processing of reclaimed material, manufacturing finished products from reclaimed material, or treating soils contaminated by hazardous waste.
- The taxpayer must own an interest directly or through a pass-through entity and operate the equipment as the primary user on the last business day of the year.
Equipment used to produce energy from reclaimed material does not qualify. The person who generated the reclaimed material may not claim the credit.
Part V is for the additional deduction for qualifying purchases of recycled material. You may claim this deduction even if you do not qualify for the equipment credit.
What you'll need
- Your name as shown on your Montana tax return and your FEIN or SSN.
- For a partnership or S corporation credit: the business name, its FEIN, and your share of the credit from Montana Schedule K-1 (PTE).
- For a credit claimed in Part III or IV: the equipment purchase date and cost, a copy of the sales receipt, equipment pamphlets, and supporting information explaining what the equipment is and how it is used.
- For specialized mobile equipment used in and outside Montana: the number of days used in Montana and the total days used everywhere.
- For the Part V deduction: the type and cost of recycled material purchased, plus a manufacturer or supplier statement showing how much recycled material the material or product contains.
S corporations and partnerships filing paper information returns must also include a separate statement identifying each owner and that owner's portion of the credit.
How to file
- Enter your name and FEIN or SSN.
- If you received a credit from a partnership or S corporation, complete Part I. Use a separate Form RCYL for each entity. Do not complete Parts II, III, or IV unless you have additional credit amounts not received from those entities.
- For your own equipment credit, answer the qualification questions in Part II. Complete Part III for equipment used in Montana or Part IV for qualifying specialized mobile equipment used in and outside Montana.
- Enter the combined credit from Parts III and IV on Part IV, line 8, subject to the $125,000 limit and your tax liability. Enter that amount on your tax return.
- For the recycled-material deduction, complete Part V and enter the amount from line 3 on your tax return.
Individuals and C corporations filing paper returns must include the completed Form RCYL. S corporations and partnerships filing paper information returns must include the completed form and the owner-allocation statement.
The supplied text does not give a mailing address or e-file instructions.
Common mistakes
- Continuing after a disqualifying answer. In Part II, stop if you answer No to question 1 or 2, or Yes to question 3. Answer all three parts of question 4. If all three answers are No, you do not qualify for the credit.
- Completing unnecessary credit sections. If you complete Part I, do not complete Parts II, III, or IV unless you have additional credit amounts not distributed by a partnership or S corporation.
- Combining credits from multiple entities on one form. Complete a separate Form RCYL for each partnership or S corporation providing you a credit.
- Exceeding the printed limits. Do not enter equipment costs above $1,000,000 in Part III or IV. The combined credit on Part IV, line 8 cannot exceed $125,000 or your tax liability.
- Leaving out required attachments. Include the sales receipt and equipment supporting information for Part III or IV claims. Include the manufacturer or supplier statement for the Part V deduction.
- Trying to carry over unused credit. Excess credit is not refundable and cannot be carried back or forward.
Questions people ask
How is the equipment credit calculated?
The credit is 25% of the first $250,000 of qualifying equipment costs, 15% of the next $250,000, and 5% of the next $500,000. For qualifying specialized mobile equipment used in more than one state, the credit is prorated using Montana-use days divided by total-use days everywhere.
Which equipment costs count?
Use the qualifying investment costs used to calculate your federal depreciation deduction. The basis includes the purchase price, transportation paid by the purchaser, and installation costs before depreciation or other reductions. Generally, use the cost before a trade-in reduction. If you previously received a credit for the traded-in equipment, use the cost after that reduction.
Can I get a refund or carry unused credit to another year?
No. The credit is limited to your individual or corporate income tax liability. Excess credit is not refundable and cannot be carried back or forward.
How much is the recycled-material deduction?
The additional deduction is 10% of qualifying recycled-material purchases that you could otherwise deduct as a Montana business expense. The products must contain recycled material at a level consistent with industry standards or standards established by the federal Environmental Protection Agency.
Where can I ask questions?
Call (406) 444-6900, or use Montana Relay at 711 for the hearing impaired.