Ch. 556                                    2004 LAWS OF MARYLAND

PAYMENT, IS SUBJECT TO THE ADDITION MODIFICATION UNDER SUBSECTION (B) OF
THIS SECTION OR A SIMILAR ADDITION MODIFICATION OF ANOTHER STATE FOR
INTANGIBLE EXPENSES OR INTEREST EXPENSES PAID TO RELATED MEMBERS.

(2) THE SUBTRACTION MODIFICATION UNDER THIS SUBSECTION IS
NOT ALLOWED TO THE EXTENT THAT:

(I) THE TRANSACTION GIVING RISE TO THE PAYMENT OF THE
INTEREST EXPENSE OR INTANGIBLE EXPENSE HAD AS A PRINCIPAL PURPOSE THE
AVOIDANCE OF STATE INCOME TAXES;

(II) THE INTEREST EXPENSE OR INTANGIBLE EXPENSE WAS NOT
PAID PURSUANT TO ARM'S-LENGTH CONTRACTS AT AN ARM'S-LENGTH RATE OF
INTEREST OR PRICE; OR

(III) THE AGGREGATE EFFECTIVE TAX RATE IMPOSED ON THE
AMOUNTS RECEIVED BY THE RECIPIENT EXCEEDS THE AGGREGATE EFFECTIVE TAX
RATE IMPOSED ON THE INCOME OF THE PAYOR CORPORATION.

(D) (F) (G) THIS SECTION MAY NOT BE CONSTRUED:

(1)      TO REQUIRE A CORPORATION TO INCLUDE IN OR ADD TO ITS NET
INCOME MORE THAN ONCE ANY AMOUNT OF INTEREST EXPENSE OR INTANGIBLE
EXPENSE THAT THE CORPORATION PAYS, ACCRUES, OR INCURS TO A RELATED
MEMBER; OR

(2)      TO LIMIT OR NEGATE ANY OTHER AUTHORITY PROVIDED TO THE
COMPTROLLER UNDER THIS ARTICLE, INCLUDING:

(I)      THE AUTHORITY TO MAKE ADJUSTMENTS UNDER § 10-109 OR §
10-402(D) OF THIS TITLE; OR

(II)     THE AUTHORITY TO ENTER INTO AGREEMENTS AND
COMPROMISES OTHERWISE ALLOWED BY LAW.

(E) (G) (H) THE COMPTROLLER SHALL ADOPT ANY REGULATIONS THAT
ARE NECESSARY OR APPROPRIATE TO IMPLEMENT THIS SECTION.

10-735.

(A) (1) IN THIS SECTION THE FOLLOWING WORDS HAVE THE MEANINGS
INDICATED.

(2) "PAYEE CORPORATION" MEANS A CORPORATION PERSON THAT HAS
RECEIVED PAYMENTS OF ROYALTIES, INTEREST, OR SIMILAR INCOME FROM
INTANGIBLES FROM A RELATED MEMBER.

(3) "RELATED MEMBER" HAS THE SAME MEANING AS SET FORTH IN §
10-306.1 OF THIS TITLE.

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