Ch. 99                                     1996 LAWS OF MARYLAND

Annotated Code of Maryland
(1988 Volume and 1995 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 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.

(d)     In computing taxable net earnings, a financial institution that is a commercial
bank, a savings bank, a trust company, or a company that substantially competes with
national banks in the State shall subtract from its net earnings computed under
subsection (a) of this section:

(1) for a taxable year beginning after December 31, 1995 but before January
1, 1997, 50% of the SUM OF:

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