BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

TO: All Concerned Persons

1. On February 22, 2007, the department published MAR Notice No. 42-2-774 regarding the proposed adoption of the above-stated rule at page 257 of the 2007 Montana Administrative Register, issue no. 4.

2. A public hearing was held on March 16, 2007, to consider the proposed adoption. No oral comments were received during the hearing. Written comments were received subsequent to the hearing and are summarized as follows along with the response of the department:

COMMENT NO. 1: Mike Green, on behalf of the Montana Society of Certified Public Accountants (society), submitted written comments stating the society supports New Rule I because the rule is in line with the federal rule and the Montana Legislature's original intent of 15-30-111, MCA. The rule corrects problems created by a previous interpretation that was included in the department's 2006 individual income tax form instructions.

The society appreciates the substantial efforts of the department's staff to respond to the concerns raised by the society's members, and their prompt work to prepare the rule and the corresponding worksheet.

RESPONSE NO. 1: The department thanks the society for its comments and support for the adoption of this rule.

3. The department adopts New Rule I (42.15.205) as proposed.

4. An electronic copy of this Adoption Notice is available through the department's site on the World Wide Web at www.mt.gov/revenue, under "for your reference"; "DOR administrative rules"; and "upcoming events and proposed rule changes." The department strives to make the electronic copy of this Adoption Notice conform to the official version of the Notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the Notice and the electronic version of the Notice, only the official printed text will be considered. In addition, although the department strives to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.

/s/ Cleo Anderson                                              /s/ Dan R. Bucks

CLEO ANDERSON                                          DAN R. BUCKS

Rule Reviewer                                                   Director of Revenue

Certified to Secretary of State April 2, 2007