3996

VETOES

(9)(I) [For} EXCEPT AS PROVIDED IN ITEM (II) OF THIS
PARAGRAPH, FOR taxable years ending after December 31, 1975,
small business corporations, as defined by § [1371] 1361 of the
Internal Revenue Code, as amended from time to time, which have
elected to be taxed in accordance with the provisions of
Subchapter "S" of the Internal Revenue Code.

(II) A SMALL BUSINESS CORPORATION THAT HAS
ELECTED TO BE TAXED IN ACCORDANCE WITH THE PROVISIONS OF
SUBCHAPTER "S" OF THE INTERNAL REVENUE CODE IS LIABLE FOR THE TAX
IMPOSED BY THIS SECTION IF ON THE LAST DAY OF THE CORPORATION'S
TAXABLE YEAR THE CORPORATION HAS ANY SHAREHOLDERS WHO ARE NOT
MARYLAND RESIDENTS, AS DEFINED IN § 279(I) OF THIS ARTICLE.

(III) THE PERCENTAGE OF THE INCOME OF A

CORPORATION THAT IS SUBJECT TO THE TAX UNDER TIME (II) OF THIS
PARAGRAPH SHALL EQUAL THE PERCENTAGE OF THE STOCK OF THE
CORPORATION OWNED ON THE LAST DAY OF THE CORPORATION'S TAXABLE
YEAR BY SHAREHOLDERS WHO ARE NOT MARYLAND RESIDENTS; AS DEFINED
IN § 279(I) OF THIS ARTICLE.

290.

(C) FOR THE PURPOSE OF SUBSECTION (A) OF THIS SECTION, THE
STATE SHALL DEEM ANY INCOME OR FRANCHISE TAX PAID TO ANOTHER
STATE BY A SMALL BUSINESS CORPORATION THAT HAS ELECTED TO BE
TAXED IN ACCORDANCE WITH THE PROVISIONS OF SUBCHAPTER "S" OF THE
INTERNAL REVENUE CODE AS PAID ON A PRO RATA BASIS BY THE
SHAREHOLDERS OF THE CORPORATION.

Income Tax - "S" Corporations

FOR the purpose of providing for a certain credit to be included
in federal adjusted gross income; providing that certain
taxes paid by "S" corporations be deemed paid on a pro rata

basis by shareholders; requiring that certain "S"

corporations withhold and pay to the Comptroller certain
taxes of nonresident shareholders; and generally relating to
certain income tax credits for "S" corporation shareholders.

FOR the purpose of requiring that certain "S" corporations
withhold and pay over to the Comptroller certain taxes of
nonresident shareholders; providing for the rate of tax and
basis for the tax to be withheld; providing for the time in
which payment is to be made; providing that the taxes so
withheld shall constitute payment on account of income taxes'
levied and imposed; providing for liability for failure to
withhold; providing that certain taxes paid by "S"
corporations be deemed paid on a pro rata basis by the
shareholders of the corporation; and generally relating to a
modification addition for certain tax credits.

BY repealing and reenacting, with amendments,