WILLIAM DONALD SCHAEFER, Governor

Ch. 2

modified income" is substituted for the former
reference to a computation "determined under § 280A(a)
of this article". Therefore, former Art. 81, §
128(b)(5)(ii), which specifically excluded "[a]ny
allowance of any dividend or interest paid or credited
on savings accounts and investment certificates or
other apportionment of profits; or ... allowance for
reserves", is omitted as surplusage.

In the introductory language of subsection (b) of this
section, the reference to amounts "otherwise allowed
to be subtracted under § 10-307(b) and (g)(3) of this
article" is substituted for the former phrases "§
280A(c)(4) ... notwithstanding" and "§ 280A(c)(6)
notwithstanding", for clarity.

In subsection (b)(2) of this section, the reference to
"federal gross income under ... the Internal Revenue
Code" is substituted for the former reference to
dividends "to the extent included in its taxable
income as defined in the laws of the United States, as
amended from time to time and in effect for the
corresponding year", for clarity.

In subsection (b)(4) of this section, the inclusion of
any interest that is "excluded from federal gross
income under § 103(a) of the Internal Revenue Code" is
added to reflect the apparent intent of the General
Assembly that all federally tax exempt interest be
included in the net earnings of a financial
institution and to conform to the practice of the
Department. When the General Assembly enacted former
Art. 81, § 128A, the only securities that qualified
for federal income tax exempt status were state,
county, and municipal bonds. Since then, Congress has
amended I.R.C. § 103 extensively. E.g., P.L. 97-34, §
812(a) recently added an exemption for interest on
bonds for financing volunteer fire departments. In
recognition of the federal changes, the policy of the
Department has been to require the inclusion of all
interest that is exempt under I.R.C. § 103.

Defined terms: "Financial institution" § 8-101
"Financial institution franchise tax" § 1-101
"Internal Revenue Code" § 1-101 "State" § 1-101

SAME -- INTERNATIONAL BANKING FACILITIES.

DEFINITIONS.

(1)  IN THIS SECTION THE FOLLOWING WORDS HAVE THE
INDICATED.

(2)  (I) "FOREIGN PERSON" MEANS:

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