PARRIS N. GLENDENING, Governor

Ch. 127

(B) (1) EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED, A FINANCIAL
INSTITUTION WHOSE BUSINESS ACTIVITY IS TAXABLE BOTH WITHIN AND WITHOUT
THIS STATE SHALL ALLOCATE AND APPORTION ITS NET EARNINGS AS PROVIDED IN
THIS SECTION, A FINANCIAL INSTITUTION ORGANIZED UNDER THE LAWS OF A
FOREIGN COUNTRY, THE COMMONWEALTH OF PUERTO RICO, OR A TERRITORY OR
POSSESSION OF THE UNITED STATES WHOSE EFFECTIVELY CONNECTED INCOME (AS
DEFINED UNDER THE INTERNAL REVENUE CODE) IS TAXABLE BOTH WITHIN THIS
STATE AND WITHIN ANOTHER STATE, OTHER THAN THE OTHER STATE IN WHICH IT
IS ORGANIZED, SHALL ALLOCATE AND APPORTION ITS NET INCOME AS PROVIDED
IN THIS SECTION.

(2) ALL NET EARNINGS SHALL BE APPORTIONED TO THIS STATE BY
MULTIPLYING SUCH INCOME BY THE APPORTIONMENT PERCENTAGE. THE
APPORTIONMENT PERCENTAGE IS DETERMINED BY ADDING THE FINANCIAL
INSTITUTION'S RECEIPTS FACTOR, PROPERTY FACTOR, AND PAYROLL FACTOR
TOGETHER AND DIVIDING THE SUM BY THREE. IF ONE OF THE FACTORS IS MISSING,
THE TWO REMAINING FACTORS ARE ADDED AND THE SUM IS DIVIDED BY TWO. IF
TWO OF THE FACTORS ARE MISSING, THE REMAINING FACTOR IS THE
APPORTIONMENT PERCENTAGE. A FACTOR IS MISSING IF BOTH ITS NUMERATOR
AND DENOMINATOR ARE ZERO, BUT IT IS NOT MISSING MERELY BECAUSE ITS
NUMERATOR IS ZERO.

(3) EACH FACTOR SHALL BE COMPUTED ACCORDING TO THE METHOD
OF ACCOUNTING (CASH OR ACCRUAL BASIS) USED BY THE FINANCIAL INSTITUTION
FOR THE TAXABLE YEAR.

(4) IF THE ALLOCATION AND APPORTIONMENT PROVISIONS OF THIS
SECTION DO NOT FAIRLY REPRESENT THE EXTENT OF THE FINANCIAL
INSTITUTION'S BUSINESS ACTIVITY IN THIS STATE, THE FINANCIAL INSTITUTION
MAY PETITION FOR OR THE DEPARTMENT MAY REQUIRE, IN RESPECT TO ALL OR
ANY PART OF THE FINANCIAL INSTITUTION'S BUSINESS ACTIVITY, IF REASONABLE;

(I) SEPARATE ACCOUNTING;

(II) THE EXCLUSION OF ONE OR MORE OF THE FACTORS;

(III) THE INCLUSION OF ONE OR MORE ADDITIONAL FACTORS
WHICH WILL FAIRLY REPRESENT THE FINANCIAL INSTITUTION'S BUSINESS
ACTIVITY IN THIS STATE; OR

(IV) THE EMPLOYMENT OF ANY OTHER METHOD TO EFFECTUATE
AN EQUITABLE ALLOCATION AND APPORTIONMENT OF THE FINANCIAL

INSTITUTION'S INCOME.

(C) (1) THE RECEIPTS FACTOR IS A FRACTION, THE NUMERATOR OF WHICH
IS THE RECEIPTS OF THE FINANCIAL INSTITUTION IN THIS STATE DURING THE
TAXABLE YEAR AND THE DENOMINATOR OF WHICH IS THE RECEIPTS OF THE
FINANCIAL INSTITUTION WITHIN AND WITHOUT THIS STATE DURING THE TAXABLE
YEAR. THE METHOD OF CALCULATING RECEIPTS FOR PURPOSES OF THE
DENOMINATOR IS THE SAME AS THE METHOD USED IN DETERMINING RECEIPTS

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