(1) Dividends and capital gains received by a corporation from an investment in a small business investment company are exempt from tax and the provisions of Title 15, chapter 31, MCA, provided all the following conditions are met:

(a) The small business investment company is organized for the purpose of diversifying and strengthening employment opportunities of companies within Montana.

(b) Within one year of licensing by the federal small business administration, 75 percent of the small business investment company's investments are in manufacturing companies as defined in (i) or timber product companies, or agricultural companies as defined in (ii), and such companies' processing plants are located within Montana. The companies must have at least 50 percent of their employees working in Montana.

(i) Manufacturing, for the purposes of this rule, is defined as engaging in the mechanical or chemical transformation of materials or substances into new products. The manufacturing facilities are usually described as plants, factories, or mills and characteristically use power driven machines and material handling equipment. Businesses engaged in assembling component parts of manufactured products are all considered to be manufacturing if the product is neither a structure affixed to real estate nor a fixed improvement. Manufacturing facilities shall not include facilities engaged in whole or part in the extraction of any mineral or nonrenewable energy resource.

(ii) Agricultural refers to the raising or processing of livestock, swine, poultry, field crops, fruit and other animal, and vegetable matter.

(c) It is substantiated that the taxpayer has invested in the small business investment company and that the small business investment company has invested in companies located within Montana. The small business investment company must provide a report as part of the annual filing of the Montana corporate income tax return.


History: 15-33-105, MCA; IMP, 15-33-102, 15-33-106, MCA; NEW, 1982 MAR p. 1488, Eff. 7/30/82; AMD, 2001 MAR p. 2046, Eff. 10/12/01; AMD, 2016 MAR p. 2198, Eff. 11/26/16.