176                               LAWS OF MARYLAND                        [CH. 142

of a political subdivision or authority thereof (other than this State
and its political subdivisions and authorities); (2) salaries and wages
and interest or dividends on obligations of any authority, commis-
sion, instrumentality, territory or possession of the United States
or of any foreign government, which by the laws or treaties of the
United States are exempt from federal income tax but not from
State Income taxes; (3) operating loss carry-overs; (4) dividends
received by individuals excluded from federal adjusted gross income
pursuant to Section 116 of the Internal Revenue Code; and (5)
distributions not previously taxed in Maryland to individuals and
losses claimed during the taxable year by individuals from electing
small business corporations, as defined in Section 1371 of the Internal
Revenue Code, which have complied with the provisions of sub-
chapter "S" of the Internal Revenue Code.

(c)    There shall be subtracted from federal adjusted gross in-
come: (1) interest or dividends on obligations of the United States
and its territories and possessions or of any authority, commission
or instrumentality of the United States to the extent includable in
gross income for federal income tax purposes but exempt from State
income taxes under the laws of the United States; (2) dividends
received upon stock of national banks located within or without the
State and also domestic corporations the shares of which are subject
to ordinary taxes; (3) operating revenue subject to gross receipts
taxes imposed by this Article (less related expenses) of railroads,
other public utilities and contract carriers; (4) undistributed income
received by individuals from electing small business corporations, as
defined in Section 1371 of the Internal Revenue Code, which have
complied with the provisions of Sub-chapter, "S" of the Internal
Revenue Code; and (5) (4) payments received by policemen and fire-
men from pension systems and FOR injuries or disabilities arising out
of and in the course of their employment as policemen or firemen.

(d)    In the event a husband and wife who have filed a joint
federal income tax return elect to file separate State income tax
returns, such taxpayers shall complete a Schedule reconciling the
separate income and deductions of each to the federal adjusted gross
income and deductions shown on their Federal income tax return.

280A.

(A)  THE NET INCOME OF A CORPORATION SHALL BE
THE TAXABLE INCOME OF SUCH TAXPAYER AS DEFINED
IN THE LAWS OF THE UNITED STATES OR IN THE CASE OF
A REGULATED INVESTMENT COMPANY, INVESTMENT
COMPANY TAXABLE INCOME AS DEFINED IN THE LAWS
OF THE UNITED STATES, EXCEPT AS HEREINAFTER MODI-
FIED.

(B)  THERE SHALL BE ADDED TO THE TAXABLE INCOME
OF SUCH TAXPAYER: (1) OPERATING LOSS CARRY-OVERS
AND (2) INCOME TAXES IMPOSED BY THE STATE OF MARY-
LAND, ANY OTHER STATE, THE DISTRICT OF COLUMBIA
AND ANY POLITICAL SUBDIVISION OF THE STATE OF
MARYLAND OR ANY OTHER STATE.

(C)  THERE SHALL BE SUBTRACTED FROM TAXABLE IN-
COME OF SUCH TAXPAYER: (1) OPERATING REVENUE SUB-