PARRIS N. GLENDENING, Governor

Ch. 320

CHAPTER 320
(Senate Bill 2)

AN ACT concerning

Income Tax - Installment Sales - Credit for Tax Paid to Another State for Earlier

Taxable Year

FOR the purpose of allowing a credit under certain circumstances against the State
income tax for certain state tax on income paid to another state for an earlier
taxable year on certain income from an installment sale that is recognized for
federal income tax purposes in the current taxable year; and providing for the
application of this Act.

BY adding to

Article - Tax - General

Section 10-703.2

Annotated Code of Maryland

(1988 Volume and 1996 Supplement)

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

Article - Tax - General

10-703.2.

(A) IN THIS SECTION, "INSTALLMENT SALE" HAS THE MEANING STATED IN §
453(B) OF THE INTERNAL REVENUE CODE.

(B) A CREDIT AGAINST THE STATE INCOME TAX IN THE AMOUNT
DETERMINED UNDER SUBSECTION (C) OF THIS SECTION MAY BE CLAIMED BY A
RESIDENT WHO RECOGNIZES INCOME FOR THE CURRENT TAXABLE YEAR FOR
FEDERAL INCOME TAX PURPOSES FROM AN INSTALLMENT SALE OF PROPERTY
LOCATED IN A STATE OTHER THAN MARYLAND IF:

(1) THE DISPOSITION OF THE PROPERTY OCCURRED IN AN EARLIER
TAXABLE YEAR; AND

(2) THE TAXPAYER PAID STATE TAX ON INCOME FOR THE EARLIER
TAXABLE YEAR TO THE STATE WHERE THE PROPERTY WAS LOCATED ON THE
INCOME THAT FOR FEDERAL INCOME TAX PURPOSES IS RECOGNIZED IN THE
CURRENT TAXABLE YEAR.

(C) THE AMOUNT OF THE CREDIT ALLOWED UNDER THIS SECTION IS EQUAL
TO THE INCOME RECOGNIZED FOR FEDERAL INCOME TAX PURPOSES FOR THE
CURRENT YEAR ON WHICH STATE INCOME TAX WAS PAID TO ANOTHER STATE IN
AN EARLIER YEAR, AS DESCRIBED IN SUBSECTION (B)(2) OF THIS SECTION,
MULTIPLIED BY THE LESSER OF:

- 2349 -