ROBERT L. EHRLICH, JR., Governor                           H.B. 753

(4) (6) "INTEREST EXPENSE" MEANS AN AMOUNT DIRECTLY OR
INDIRECTLY ALLOWED AS A DEDUCTION UNDER § 163 OF THE INTERNAL REVENUE
CODE FOR PURPOSES OF DETERMINING TAXABLE INCOME UNDER THE INTERNAL
REVENUE CODE.

(5) (7) "RELATED MEMBER" MEANS A PERSON THAT, WITH RESPECT
TO THE TAXPAYER DURING ALL OR ANY PORTION OF THE TAXABLE YEAR, IS:

(I)      A RELATED ENTITY;

(II)     A COMPONENT MEMBER, AS DEFINED IN § 1563(B) OF THE
INTERNAL REVENUE CODE; OR

(III)   A PERSON TO OR FROM WHOM THERE IS ATTRIBUTION OF
STOCK OWNERSHIP IN ACCORDANCE WITH § 1563(E) OF THE INTERNAL REVENUE
CODE.

(6) (8) "RELATED ENTITY" MEANS A PERSON THAT, APPLYING THE
ATTRIBUTION RULES OF § 318 OF THE INTERNAL REVENUE CODE, IS:

(I)      A STOCKHOLDER WHO IS AN INDIVIDUAL, OR A MEMBER OF
THE STOCKHOLDER'S FAMILY ENUMERATED IN § 318 OF THE INTERNAL REVENUE
CODE, IF THE STOCKHOLDER AND THE MEMBERS OF THE STOCKHOLDER'S FAMILY
OWN, DIRECTLY, INDIRECTLY, BENEFICIALLY, OR CONSTRUCTIVELY, IN THE
AGGREGATE, AT LEAST 50% OF THE VALUE OF THE TAXPAYER'S OUTSTANDING
STOCK;

(II)     A STOCKHOLDER, OR A STOCKHOLDER'S PARTNERSHIP,
LIMITED LIABILITY COMPANY, ESTATE, TRUST, OR CORPORATION, IF THE
STOCKHOLDER AND THE STOCKHOLDER'S PARTNERSHIPS, LIMITED LIABILITY
COMPANIES, ESTATES, TRUSTS, AND CORPORATIONS OWN DIRECTLY, INDIRECTLY,
BENEFICIALLY, OR CONSTRUCTIVELY, IN THE AGGREGATE, AT LEAST 50% OF THE
VALUE OF THE TAXPAYER'S OUTSTANDING STOCK; OR

(III)   A CORPORATION, OR A PARTY RELATED TO THE CORPORATION
IN A MANNER THAT WOULD REQUIRE AN ATTRIBUTION OF STOCK FROM THE
CORPORATION TO THE PARTY OR FROM THE PARTY TO THE CORPORATION UNDER
THE ATTRIBUTION RULES OF § 318 OF THE INTERNAL REVENUE CODE, IF THE
TAXPAYER OWNS, DIRECTLY. INDIRECTLY, BENEFICIALLY, OR CONSTRUCTIVELY, AT
LEAST 50% OF THE VALUE OF THE CORPORATION'S OUTSTANDING STOCK.

(B) (1) IN ADDITION TO THE MODIFICATIONS UNDER §§ 10-305 AND 10-306
OF THIS SUBTITLE, EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION, THE
AMOUNTS UNDER PARAGRAPH (2) OF THIS SUBSECTION ARE ADDED TO THE
FEDERAL TAXABLE INCOME OF A CORPORATION TO DETERMINE MARYLAND
MODIFIED INCOME.

(2) THE ADDITION UNDER THIS SUBSECTION INCLUDES ANY
OTHERWISE DEDUCTIBLE INTEREST EXPENSE OR INTANGIBLE EXPENSE, IF THE
INTEREST EXPENSE OR INTANGIBLE EXPENSE IS DIRECTLY OR INDIRECTLY PAID,

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