PARRIS N. GLENDENING, Governor

Ch. 127

Annotated Code of Maryland

(1994 Replacement Volume and 1994 Supplement)

BY adding to

Article - Tax - Property

Section 7-221.1

Annotated Code of Maryland

(1994 Replacement Volume and 1994 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 [modifications] MODIFICATION required

REQUIREMENTS under 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

(5)     interest excluded from federal gross income under § 103 of the Internal
Revenue Code and derived from a bond:

(i) issued by a state or a public corporation, special district, political
subdivision of a state or their instrumentalities; or

(ii) under § 150 of the Internal Revenue Code, treated as a bond
issued by a state or a public corporation, special district, or political subdivision of a state
or their instrumentalities].

[(c) A financial institution shall subtract from its net earnings computed under
subsection (a) of this section interest expense incurred to purchase or carry a bond as
defined in subsection (b)(5) of this section.]

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