ROBERT L. EHRLICH, JR., Governor                             Ch. 556

(E) (1) FOR PURPOSES OF DETERMINING THE EFFECTIVE RATE OF TAX
IMPOSED IN THE AGGREGATE BY OTHER JURISDICTIONS UNDER SUBSECTION (C) OF
THIS SECTION:

(I) THE EFFECTIVE RATE OF TAX IMPOSED BY A JURISDICTION IS
THE STATUTORY RATE MULTIPLIED BY THE APPLICABLE APPORTIONMENT RATE;

AND

(II) THE EFFECTIVE RATE OF TAX IMPOSED IN THE AGGREGATE IS
THE SUM OF THE EFFECTIVE RATES OF TAX IMPOSED BY ALL JURISDICTIONS WHERE
THE RELATED MEMBER IS SUBJECT TO TAX AND WHERE THE MEASURE OF THE TAX
IMPOSED INCLUDED THE PAYMENT.

(2) EVEN IF THE PAYMENT IS NOT INCLUDED IN THE RELATED
MEMBER'S INCOME FOR PURPOSES OF A COMBINED OR CONSOLIDATED RETURN
FILED IN ANOTHER JURISDICTION, THE MEASURE OF THE TAX IMPOSED BY THAT
JURISDICTION INCLUDES THE INTEREST EXPENSE OR INTANGIBLE EXPENSE FOR
PURPOSES OF SUBSECTION (C)(3) OF THIS SECTION IF:

(I) THE INCOME OF THE CORPORATION THAT PAID, ACCRUED, OR
INCURRED THE EXPENSE IS INCLUDED IN THE COMBINED OR CONSOLIDATED
RETURN THAT ALSO INCLUDES THE RELATED MEMBER; AND

(II) THE PAYMENT IS NOT DEDUCTED BY THE PAYOR
CORPORATION FOR PURPOSES OF THE COMBINED OR CONSOLIDATED RETURN.

(E) IF THE PAYOR AND THE RECIPIENT ARE BOTH INCLUDED IN A COMBINED
OR CONSOLIDATED REPORT FILED IN A JURISDICTION:

(1) FOR PURPOSES OF SUBSECTION (C)(3)(II)2 OF THIS SECTION, THE
MEASURE OF THE TAX IMPOSED BY THAT JURISDICTION SHALL BE DEEMED TO
INCLUDE THE INTEREST EXPENSE OR INTANGIBLE EXPENSE; AND

(2) FOR PURPOSES OF DETERMINING THE EFFECTIVE RATE OF TAX
IMPOSED BY THE JURISDICTION THE APPLICABLE APPORTIONMENT RATE IS THE
LESSER OF:

(I) THE APPORTIONMENT RATE OF THE RECIPIENT CORPORATION,
DETERMINED BY USING ONLY THAT CORPORATION'S FACTORS IN THE NUMERATORS
AND DENOMINATORS OF THE APPORTIONMENT FORMULA; OR

(II) THE APPORTIONMENT RATE OF THE COMBINED OR
CONSOLIDATED GROUP, DETERMINED BY COMBINING THE RECIPIENT
CORPORATION'S FACTORS WITH THE FACTORS OF OTHER MEMBERS OF THE GROUP
INCLUDED IN THE COMBINED OR CONSOLIDATED REPORT.

(F) (1) IN ADDITION TO THE MODIFICATIONS UNDER §§ 10-305 AND 10-306
OF THIS SUBTITLE, SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTION, TO
DETERMINE MARYLAND TAXABLE INCOME, AN AMOUNT IS SUBTRACTED FROM THE
FEDERAL TAXABLE INCOME OF A CORPORATION EQUAL TO THE AMOUNT RECEIVED
AS ROYALTIES, INTEREST, OR SIMILAR INCOME FROM INTANGIBLES FROM A
RELATED MEMBER TO THE EXTENT THE RELATED MEMBER WITH RESPECT TO THE

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