Ch. 3

2007 Laws of Maryland

amount determined under item (2) of this subsection to that
corporation by multiplying the amount determined under item (2) of
this subsection by a fraction:

(I) the numerator of which is the maryland
apportionment fraction of that corporation, determined by using
that corporation's maryland factors in the numerators of the
apportionment formula and using the combined factors of all
members of the unitary group in the denominators of the
apportionment formula; and

(II) the denominator of which is the sum of the
maryland apportionment fractions of the members of the unitary
group that are subject to the maryland income tax.

(D) (1) Subject to regulations adopted by the Comptroller,
a corporation that is part of a unitary group shall determine its
income derived from or attributable to trade or business in the
state using a water's edge method as described in this subsection.

(2) Under the water's edge method, the unitary group
for purposes of the combined reporting method required under this
section shall include only the following affiliated entities;

(I) corporations that are incorporated in the
United States, excluding corporations making an election under §§
931 THROUGH 936 of the internal revenue code;

(II) domestic international sales corporations, as
described in §§ 991 through 994 of the internal revenue code and
foreign sales corporations as described in §§ 921 through 927 of the
internal revenue code;

(III) any corporation, other than a bank, regardless
of the place where it is incorporated if the average of its property,
payroll, and sales factors within the united states is 20% or more;

(IV) export trade corporations, as described in §§
970 through 972 of the internal revenue code;

(V) a foreign corporation deriving gain or loss
from disposition of an interest in real property in the united

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