(1) Businesses, including corporations, individuals, and partnerships, may take an additional 10 percent deduction of the expenses related to the purchase of recycled products used within Montana in their business if the recycled products purchased contain recycled material at a level consistent with industry standards and/or standards established by the Federal Environmental Protection Agency when such standards exist. The department may request the assistance of the Montana Department of Environmental Quality to determine if the product qualifies as a recycled product. Due to continuing technological advances in the recycling industry, the standards will be subject to constant change. The industry standards to be used will be those in effect at the time the product was purchased.
(2) For a taxpayer paying individual income tax, the deduction is an adjustment to federal adjusted gross income for individual income tax.
(3) For a corporation paying the corporate income tax/alternative corporate income tax, the deduction is an adjustment to federal taxable income for the corporate income tax/alternative corporate income tax.
(4) A shareholder of an S corporation may claim a share of the allowable deduction for expenditures that the S corporation incurred for purchase of qualified recycled material based on the shareholder's pro rata share of their ownership in the S corporation. A partner of a partnership may claim a share of the allowable deduction for expenditures the partnership incurred for the purchase of qualified recycled material in the same proportion used to report the partnership's income or loss for Montana income tax purposes.
(5) Any deductions claimed are subject to review by the department. The responsibility to maintain accurate records to substantiate deductions remains with the taxpayer.