Ch. 265                                    1994 LAWS. OF MARYLAND

Approved May 2, 1994.

CHAPTER 265           

(House Bill 426)

AN ACT concerning

Financial Institution Franchise Tax - Computation

-FOR the purpose of codifying under the financial institution franchise tax a subtraction
modification from the net earnings of financial institutions for certain interest
expenses attributable to certain tax exempt bonds.

BY repealing and reenacting, with amendments,
Article - Tax - General
. Section 8-204
Annotated Code of Maryland
(1988 Volume and 1993 Supplement)

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That the Laws of Maryland read as follows:

Article - Tax - General

8-204.

(a)     A financial institution shall compute its net earnings:

(1)     based on the accounting period used as its fiscal year; and

(2)     subject to the [additions] MODIFICATIONS required under [subsection
(b) of] this section, in the manner that a corporation computes, for purposes of the
income tax, the Maryland modified income.

(b)     A financial institution shall add to its net earnings computed under subsection
(a) of this section the amounts that, even if otherwise allowed to be subtracted under §
10-307(b) and (g)(2) and (5) of this article, equal:

(1)     profit realized from the sale or exchange of bonds issued by this State or
a political subdivision of this State;

(2)     dividends received from foreign corporations and included in federal
gross income under § 78 of the Internal Revenue Code;

(3)     interest derived from a United States obligation;

(4)     state tax exempt interest received from a mutual fund and allowed to be
subtracted under § 10-307(g)(5) of this article; and

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