HARRY HUGHES. Governor

1347

[(r) Manufacturing machinery and equipment means all
machinery and equipment which by acceptable and consistent
accounting standards is capitalized for the purpose of
claiming depreciation and which is used in manufacturing,
assembling, processing or refining products for sale or in
the generation of electricity, or research and development.
It shall include all machinery and equipment used in any
stage of such operations from the handling of raw materials
or components on the manufacturing site until the product is
ready for delivery or storage. It shall also include
capitalized replacement parts upon manufacturing machinery
and equipment, and the purchase of capitalized services for
the assembly, or fabrication of manufacturing machinery or
replacement parts thereof. It shall not include machinery
or equipment used in administration, managerial, sales and
other nonoperational activities. The term also does not
include any personal property which when installed becomes a
part of the real estate, (but does include foundations in
support of machinery and equipment) nor does it include
tools and appliances which are charged to expense accounts
and/or are not capitalized. Specifically included,
however, is any machinery, device, or equipment, which might
normally be considered as a part of real estate, required to
conform to air or water pollution laws or regulations and
melting, smelting, heating, annealing, or coke oven
furnaces.]

[(s) "Research and development" means basic and
applied research in the sciences and engineering, and the
design and development of prototypes and processes.
Excluded from this definition are routine product testing,
market research, sales promotion, sales service, research in
the social sciences or psychology, and other nontechnical
activities or technical and nontechnical services.]

SECTION 2. AND BE IT FURTHER ENACTED, That Section(s)

372(f) through (q), respectively, of Article 81 - Revenue

and Taxes, of the Annotated Code of Maryland be renumbered
to be Section(s) 372(e) through (p), respectively.

SECTION 3. AND BE IT FURTHER ENACTED, That section(s)
of the Annotated Code of Maryland be repealed, amended, or
enacted to read as follows:

Article 81 - Revenue and Taxes

374.

Any person who uses, STORES, OR CONSUMES tangible
personal property which has been manufactured, fabricated or
assembled by him from raw materials and/or component parts,
either within or without this State, shall be required to
pay the tax on such property as computed in § 373, measured
by his purchase price of the raw materials and/or component
parts contained in such tangible personal property.

375.