Ch. 178

LAWS OF MARYLAND

(i) excluding the oil percentage depletion
allowance claimed under § 613 or § 613A of the Internal Revenue
Code; and

(ii) adding the amount allowed to be subtracted
as an adjustment for net capital gains under [§ 10-207(p)] §
10-207(I) of this subtitle.

(b)  Each shareholder of an S corporation shall report the
shareholder's pro rata share of the tax preference items of the
corporation.

(c)  (1) A nonresident shall include as tax preference items
only those items that are based on income taxable in the State.

(2) If the tax preference items are based on income
derived both in and out of the State, the nonresident [is
allowed] SHALL INCLUDE only a fraction:

(i) the numerator of which is the dollar amount
of the tax preference items based on income taxable in the State;
and

(ii) the denominator of which is the total
dollar amount of the tax preference items.

10-305.

(a) To the extent excluded from federal taxable income, the
amounts under this section are added to the federal taxable
income of a corporation to determine Maryland modified income.

(d)  The addition under subsection (a) of this section
includes the additions required for an individual under:

(1)   [§ 10-205(b)] § 10-204(B) of this title
(Dividends and interest from another, state or local obligation);

(2)   [§ 10-205(c)(2)] § 10-204(C)(2) of this title
(Federal tax exempt income); and

(3)   [§ 10-205(e)] § 10-204(E) of this title (Oil
percentage depletion allowance).

10-306.

(a)  In addition to the modification under § 10-305 of this
subtitle, the amounts under this section are added to the federal
taxable income of a corporation to determine Maryland modified
income.

(b)  The addition under subsection (a) of this section
includes the additions required for an individual under:

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