838                             LAWS OF MARYLAND                     [CH. 376

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) to the extent
included, undistributed corporate income attributed to individuals
from small business corporations, as denned by Section 1371 of the
Internal Revenue Code, as amended from time to time, which elected
to be taxed in accordance with the provisions of subchapter "S" of
the Internal Revenue Code; (3) payments received by policemen
and firemen from pension systems for injuries or disabilities arising
out of and in the course of their employment as policemen or fire-
men; and (4) for all taxable years ending after December 31, 1966,
amounts received by an individual who has attained the age of 65
years before the close of the taxable year, as an annuity, pension,
or endowment under a private, municipal, State or federal employee
retirement system, and included in such individual's federal ad-
justed gross income, this subtraction not to exceed $1,200 less the
amount of old age, survivors, or disability benefits received under the
Social Security Act, the Railroad Retirement Act, or both, as the
case may be; and (5) in the case of persons retired prior to January
1, 1967, payments received which represent unrecovered contribu-
tions to a retirement system over and above any amount of such
contributions remaining to be recovered tax free on the federal
return, limited to an amount which together with the amount of any
tax-free exclusion in the federal return does not exceed the exclusion
which was permitted under the laws and regulations of this State
prior to the year 1967; and (6) to the extent included, the amount of
any refunds of income taxes paid to the State of Maryland, any other
state, the District of Columbia, and any political subdivision of the
State of Maryland and of any other state £; and (7) for taxable
years beginning after December 31, 1968, the amount of capital
gains included therein which was realized from the sale, exchange or
other disposition of property prior to January 1, 1967, which was
not includable in "gross income" under Section 280(A) of Article 81
of the Annotated Code of Maryland in effect on the date of realization
of said gain or gains].

280A.

(c) There shall be subtracted from taxable income of such taxpayer
the following items to the extent included in federal income: (1)
operating revenue subject to gross receipts taxes imposed by this
article (less related expenses) of railroads, other public utilities
and contract carriers; (2) fifty (50) percent of the excess of net
long-term capital gain over net short-term capital loss as defined in
the laws of the United States, as amended from time to time; (3)
the amount of any refunds of income taxes paid to the State of
Maryland, any othe