(1) The total amount of credit an employer participating in the Insure Montana program may claim is determined by the State Auditor's office. The department can only adjust the total credit allocation among the owners of an S Corporation, partnership, or limited liability company in order to conform to 15-30-2368, MCA, and this rule.

(a) If the employer is an S corporation, the shareholders' share of the total credit is based on their ownership percentage.

(b) If the employer is a partnership or a limited liability company that is taxed like a partnership, the partners' or members' share of the total credit is based on the their share of the entity's income or loss reported for Montana income tax purposes.

(2) Special rules apply to entities that file fiscal year tax returns.

(a) A C corporation or other entity that files its tax return on a fiscal year-end basis must allocate the total amount of the credit it is entitled to for a calendar year between the filing periods which cover that year. The total is allocated based on the ratio of the number of months of the calendar year that are included in the fiscal year. For example, a corporation is eligible for a credit of $6,000 for 2010. If their fiscal year ends September 30, they claim $4,500 (9/12ths of $6,000) on the return for the year ending on September 30, 2010 and the remainder of $1,500 (3/12ths of $6,000) on the return filed for the year ending on September 30, 2011.

(b) If a fiscal year return is due before the amount of credit for the calendar year has been determined by the State Auditor's office, an estimated credit can be claimed. The estimated credit should be based on the prior year's credit if there is no change in the number of participating employees, spouses, or dependents. Any remaining amount may be claimed on the subsequent tax year.