THEODORE R. MCKELDIN, GOVERNOR                            61

health plans or wage continuation plans, or contributed by em-
ployers to such plans, to be applicable to income tax returns for
any taxable year commencing on or after January 1, 1957.

Section 1. Be it enacted by the General Assembly of Maryland,
That Section 280 of Article 81 of the Annotated Code of Maryland
(1957 Edition), title "Revenue and Taxes", sub-title "Income Tax",
be and it is hereby repealed and re-enacted, with amendments, to
read as follows:

280. Gross Income and Exclusions Therefrom.

"Gross income" means income from whatever source derived, in-
cluding salaries, wages or compensation for personal services of
whatever kind and in whatever form paid; alimony received, interest,
dividends, rents, royalties and annuity income; and gains, profits
and income derived from professions, vocations, trades, business and
commerce. The gross income of an employee shall include the amount
of the employer's contribution to a pension fund or trust which is
not exempt or approved under federal standards, where the em-
ployee's rights may not be forfeited; such income to be taxable in the
year in which the contribution is made [and gross income shall in-
clude amounts received by an employee under an accident and health
welfare plan as defined in this sub-title to the extent that such
amounts represent reimbursement for the medical deduction pro-
vided under Section 281 (q) hereof and claimed by the employee in
a return filed hereunder for a taxable year prior to the year such
reimbursement is received by the taxpayer], "Gross income" shall
not include the following:

(a)   Capital gains realized from the sale, exchange or other dispo-
sition of property held by a taxpayer (whether or not connected with
his trade or business) other than stock in trade of the taxpayer or
other property of a kind that would properly be included in the in-
ventory of the taxpayer if on hand at the close of the taxable year,
or property held by the taxpayer primarily for sale to customers in
the ordinary course of his trade or business.

(b)  The proceeds of life insurance policies paid by reason of the
death of the insured, whether in a single sum or otherwise (but if
such amounts are held by the insurer under an agreement to pay
interest thereon, the interest payments shall be included in gross
income).

(c)  Amounts received (other than amounts paid by reason of the
death of the insured) under life insurance or endowment contracts,
either during the term or at maturity or upon surrender of the con-
tract, equal to the total amount of the premiums paid therefor.

(d)  The value of property acquired by gift, 'bequest, devise, in-
heritance or succession. Beginning with the calendar year 1944 and
thereafter, there shall not be excluded from gross income under this
paragraph, the income from such property, or, in case the gift, be-
quest, devise or inheritance is of income from property, the amount
of such income. For the purposes of this paragraph, if, under the
terms, of the gift, bequest, devise, or inheritance, payment, credit,
or distribution thereof is to be made at intervals, to the extent that
it is paid or credited or to be distributed out of income from property,
it shall be considered a gift, bequest, devise, or inheritance of income
from property.