ROBERT L. EHRLICH, JR., Governor                             Ch. 557

CORPORATION BY THIS STATE. BY OTHER STATES OR POSSESSIONS OF THE UNITED
STATES. AND BY FOREIGN NATIONS THAT HAVE ENTERED INTO COMPREHENSIVE
TAX TREATIES WITH THE UNITED STATES GOVERNMENT IS EQUAL TO OR GREATER
THAN 4%; OR

(III) IN THE CASE OF AN INTEREST EXPENSE, THE CORPORATION
AND THE RELATED MEMBER ARE BANKS.

(D) FOR PURPOSES OF SUBSECTION (C)(3)(II) OF THIS SECTION, THE
COMPTROLLER MAY PROVIDE BY REGULATION FOR AN ALTERNATE CALCULATION
OF THE EFFECTS RATE OF TAX IMPOSED IN THE AGGREGATE ON THE AMOUNTS
RECEIVED BY THE RELATED MEMBER IF;

(1) THE RELATED MEMBER:

(I) IS SUBJECT IN ANOTHER STATE TO A TAX THAT IS MEASURED
BY GROSS RECEIPTS OR IS MEASURED BY NET CAPITAL OR NET WORTH; AND

(II) IS NOT SUBJECT IN THAT STATE TO A TAX MEASURED BY NET
INCOME OR RECEIPTS; OR

(2) UNDER OTHER CIRCUMSTANCES. THE COMPTROLLER DETERMINES
THAT IT IS IMPRACTICAL FOR A RELATED MEMBER THAT IS SUBJECT TO TAX IN THIS
STATE OR ANOTHER STATE TO DEMONSTRATE THAT THE REQUIREMENTS OF
SUBSECTION (C)(3)(II) HAVE BEEN SATISFIED:

(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.

(D) (F) THIS SECTION MAY NOT BE CONSTRUED;

- 2645 -