Maryland 2023 2023 Regular Session

Maryland House Bill HB337 Introduced / Bill

Filed 01/25/2023

                     
 
EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW. 
        [Brackets] indicate matter deleted from existing law. 
          *hb0337*  
  
HOUSE BILL 337 
Q3   	3lr1129 
      
By: Delegates Palakovich Carr, Charkoudian, Cullison, Ebersole, Grossman, Hill, 
Ivey, Lehman, R. Lewis, McCaskill, Moon, Ruth, Stewart, Terrasa, 
Washington, Wells, and Wilkins 
Introduced and read first time: January 25, 2023 
Assigned to: Ways and Means 
 
A BILL ENTITLED 
 
AN ACT concerning 1 
 
Income Tax – Capital Gains, Dividends, and Foreign–Derived Intangible Income 2 
– Alterations  3 
(Investing in Marylanders Act of 2023) 4 
 
FOR the purpose of providing for an additional State individual income tax rate on the net 5 
capital gains of individuals, subject to certain exceptions; providing addition 6 
modifications under the Maryland income tax for the amount of certain deductions 7 
under the Internal Revenue Code for dividends paid for real estate investment 8 
trusts, foreign–derived intangible income, and certain dividends received from a 9 
foreign corporation; altering a certain addition modification under the Maryland 10 
income tax for certain corporate interest expenses and intangible expenses; altering 11 
a certain subtraction modification under the Maryland income tax for certain 12 
dividends received from a foreign corporation to preclude inclusion of certain income 13 
treated as dividends under the Internal Revenue Code; and generally relating to the 14 
Maryland income tax. 15 
 
BY repealing and reenacting, with amendments, 16 
 Article – Tax – General 17 
 Section 10–105(a), 10–305, 10–306.1, and 10–307(d) 18 
 Annotated Code of Maryland 19 
 (2022 Replacement Volume) 20 
 
BY repealing and reenacting, without amendments, 21 
 Article – Tax – General 22 
Section 10–204(a) and 10–307(a) 23 
 Annotated Code of Maryland 24 
 (2022 Replacement Volume) 25 
 
BY adding to 26  2 	HOUSE BILL 337  
 
 
 Article – Tax – General 1 
Section 10–204(m)  2 
 Annotated Code of Maryland 3 
 (2022 Replacement Volume) 4 
 
 SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 5 
That the Laws of Maryland read as follows: 6 
 
Article – Tax – General 7 
 
10–105. 8 
 
 (a) (1) For an individual other than an individual described in paragraph (2) 9 
of this subsection, the State income tax rate is: 10 
 
 (i) 2% of Maryland taxable income of $1 through $1,000; 11 
 
 (ii) 3% of Maryland taxable income of $1,001 through $2,000; 12 
 
 (iii) 4% of Maryland taxable income of $2,001 through $3,000; 13 
 
 (iv) 4.75% of Maryland taxable income of $3,001 through $100,000; 14 
 
 (v) 5% of Maryland taxable income of $100,001 through $125,000; 15 
 
 (vi) 5.25% of Maryland taxable income of $125,001 through $150,000; 16 
 
 (vii) 5.5% of Maryland taxable income of $150,001 through $250,000; 17 
and 18 
 
 (viii) 5.75% of Maryland taxable income in excess of $250,000. 19 
 
 (2) For spouses filing a joint return or for a surviving spouse or head of 20 
household as defined in § 2 of the Internal Revenue Code, the State income tax rate is: 21 
 
 (i) 2% of Maryland taxable income of $1 through $1,000; 22 
 
 (ii) 3% of Maryland taxable income of $1,001 through $2,000; 23 
 
 (iii) 4% of Maryland taxable income of $2,001 through $3,000; 24 
 
 (iv) 4.75% of Maryland taxable income of $3,001 through $150,000; 25 
 
 (v) 5% of Maryland taxable income of $150,001 through $175,000; 26 
 
 (vi) 5.25% of Maryland taxable income of $175,001 through $225,000; 27 
   	HOUSE BILL 337 	3 
 
 
 (vii) 5.5% of Maryland taxable income of $225,001 through $300,000; 1 
and 2 
 
 (viii) 5.75% of Maryland taxable income in excess of $300,000. 3 
 
 (3) (I) EXCEPT AS PROVIDED IN SUBPARAGRAPH (II) OF THIS 4 
PARAGRAPH , IF THE MARYLAND TAXABLE INCO ME OF AN INDIVIDUAL DESCRIBED 5 
IN PARAGRAPH (1) OR (2) OF THIS SUBSECTION INCLUDES ANY AMOUNT OF NET 6 
CAPITAL GAIN, AS DEFINED AND DETER MINED UNDER THE INTERNAL REVENUE 7 
CODE, THE STATE INCOME TAX FOR THE INDIVIDUAL IS TH E SUM OF: 8 
 
 1. THE RATES SPECIFIED IN PARAGRAPH (1) OR (2) OF 9 
THIS SUBSECTION APPL IED TO MARYLAND TAXABLE INCOME ; AND 10 
 
 2. AN ADDITIONAL 1% OF THE AMOUNT OF NET CAPITAL 11 
GAIN INCLUDED IN THE INDIVIDUAL’S MARYLAND TAXABLE INCO ME. 12 
 
 (II) TO THE EXTENT INCLUDE D IN CALCULATING NET CAPITAL 13 
GAIN FOR FEDERAL INC OME TAX PURPOSES , ANY AMOUNT OF CAPITA L GAIN FROM 14 
THE SALE OR EXCHANGE OF THE FOLLOWING ASS ETS IS NOT SUBJECT T O THE 15 
ADDITIONAL 1% TAX RATE SPECIFIED I N SUBPARAGRAPH (I)2 OF THIS PARAGRAPH :  16 
 
 1. ANY RESIDENTIAL DWEL LING SOLD FOR LESS T HAN 17 
$1,000,000 THAT IS THE INDIVIDU AL’S PRIMARY RESIDENCE , INCLUDING THE LAND 18 
ON WHICH THE DWELLIN G IS LOCATED AND ANY ACCESSORY DWELLING U NIT 19 
ASSOCIATED WITH THE RESIDENCE, IF THE DWELLING IS A SINGLE–FAMILY HOME , A 20 
TOWN HOUSE , A ROW HOME , A RESIDENTIAL CONDOM INIUM UNIT, OR A 21 
RESIDENTIAL COOPERAT IVE UNIT; 22 
 
 2. ASSETS HELD IN: 23 
 
 A. A CASH OR DEFERRED A RRANGEMENT PLAN UNDE R § 24 
401(K) OF THE INTERNAL REVENUE CODE; 25 
 
 B. A TAX–SHELTERED ANNUITY OR CUSTODIAL ACCOUNT 26 
UNDER § 403(B) OF THE INTERNAL REVENUE CODE;  27 
 
 C. A DEFERRED COMPENSAT ION PLAN UNDER § 457(B) 28 
OF THE INTERNAL REVENUE CODE;  29 
 
 D. AN INDIVIDUAL RETIRE MENT ACCOUNT OR 30 
INDIVIDUAL RETIREMEN T ANNUITY UNDER § 408 OF THE INTERNAL REVENUE 31 
CODE; 32 
  4 	HOUSE BILL 337  
 
 
 E. A ROTH INDIVIDUAL RETIR EMENT ACCOUNT UNDER § 1 
408A OF THE INTERNAL REVENUE CODE; OR 2 
 
 F. A DEFINED CONTRIBUTI ON PLAN, A DEFINED BENEFIT 3 
PLAN, OR A SIMILAR RETIREM ENT SAVINGS PLAN ; 4 
 
 3. CATTLE, HORSES, OR BREEDING LIVESTOC K HELD 5 
FOR MORE THAN 12 MONTHS IF, FOR THE TAXABLE YEAR OF THE SALE OR 6 
EXCHANGE, MORE THAN 50% OF THE INDIVIDUAL ’S GROSS INCOME FOR T HE 7 
TAXABLE YEAR , INCLUDING INCOME FRO M THE SALE OR EXCHAN GE OF CAPITAL 8 
ASSETS, IS FROM FARMING OR R ANCHING; 9 
 
 4. LAND THAT IS SUBJECT TO A CONSERVATION , 10 
AGRICULTURAL , OR FOREST PRESERVATI ON EASEMENT OR THAT WILL BE SUBJECT 11 
TO A CONSERVATION , AGRICULTURAL , OR FOREST PRESERVATI ON EASEMENT ON 12 
THE SALE OR EXCHANGE OF THE LAND; 13 
 
 5. PROPERTY USED IN A T RADE OR BUSINESS , THE COST 14 
OF WHICH IS DEDUCTIB LE UNDER § 179 OF THE INTERNAL REVENUE CODE; OR 15 
 
 6. AFFORDABLE HOUSING OWNED BY A NONPROFIT 16 
ORGANIZATION . 17 
 
10–204. 18 
 
 (a) To the extent excluded from federal adjusted gross income, the amounts under 19 
this section are added to the federal adjusted gross income of a resident to determine 20 
Maryland adjusted gross income. 21 
 
 (M) THE ADDITION UNDER SU BSECTION (A) OF THIS SECTION INCL UDES ANY 22 
AMOUNT DEDUCTED UNDER § 857 OF THE INTERNAL REVENUE CODE FOR 23 
DIVIDENDS PAID FOR R EAL ESTATE INVESTMEN T TRUSTS.  24 
 
10–305. 25 
 
 (a) To the extent excluded from federal taxable income, the amounts under this 26 
section are added to the federal taxable income of a corporation to determine Maryland 27 
modified income. 28 
 
 (b) The addition under subsection (a) of this section includes the net capital loss 29 
carryback, as defined in § 1212 of the Internal Revenue Code. 30 
 
 (c) The addition under subsection (a) of this section includes any taxes based on 31 
net income that are imposed by any state or by a political subdivision of any state. 32 
   	HOUSE BILL 337 	5 
 
 
 (d) The addition under subsection (a) of this section includes the additions 1 
required for an individual under: 2 
 
 (1) § 10–204(b) of this title (Dividends and interest from another state or 3 
local obligation); 4 
 
 (2) § 10–204(c)(2) of this title (Federal tax–exempt income); 5 
 
 (3) § 10–204(e) of this title (Oil percentage depletion allowance); 6 
 
 (4) § 10–204(i) of this title (Deduction for qualified production activities 7 
income); 8 
 
 (5) § 10–204(j) of this title (Deduction for costs for security clearance 9 
administrative expenses and construction and equipment costs incurred to construct or 10 
renovate a sensitive compartmented information facility); [and] 11 
 
 (6) § 10–204(l) of this title (Deduction for donations to qualified permanent 12 
endowment funds); AND 13 
 
 (7) § 10–204(M) OF THIS TITLE (DEDUCTION FOR DIVIDEN DS PAID 14 
FOR REAL ESTATE INVESTMENT TR USTS). 15 
 
 (E) THE ADDITION UNDER SU BSECTION (A) OF THIS SECTION INCL UDES ANY 16 
AMOUNT DEDUCTED UNDER: 17 
 
 (1) § 250 OF THE INTERNAL REVENUE CODE FOR FOREIGN –DERIVED 18 
INTANGIBLE INCOME ; AND 19 
 
 (2) §§ 243 AND 245A OF THE INTERNAL REVENUE CODE FOR 20 
DIVIDENDS RECEIVED F ROM A FOREIGN CORPORATION .  21 
 
10–306.1. 22 
 
 (a) (1) In this section the following words have the meanings indicated. 23 
 
 (2) “Aggregate effective tax rate” means the sum of the effective rates of 24 
tax imposed by this State, other states or possessions of the United States, and foreign 25 
nations that have entered into comprehensive tax treaties with the United States 26 
government, where a related member receiving a payment of interest expense or intangible 27 
expense is subject to tax and where the measure of the tax imposed included the payment. 28 
 
 (3) [“Bank” means: 29 
 
 (i) a bank holding company as defined in the federal Bank Holding 30 
Company Act of 1956, as amended, or a bank, trust company, savings bank, or savings and 31  6 	HOUSE BILL 337  
 
 
loan association incorporated or chartered under the laws of this State, another state, or 1 
the United States; or 2 
 
 (ii) a subsidiary or affiliate of an entity described in item (i) of this 3 
paragraph. 4 
 
 (4)] “Effective rate of tax imposed” means, as to any state, possession of the 5 
United States, or foreign nation, the maximum statutory tax rate imposed by the state, 6 
possession, or foreign nation multiplied by the applicable apportionment rate. 7 
 
 [(5)] (4) “Intangible expense” means: 8 
 
 (i) an expense, loss, or cost for, related to, or in connection directly 9 
or indirectly with the direct or indirect acquisition, use, maintenance, management, 10 
ownership, sale, exchange, or any other disposition of intangible property, to the extent the 11 
expense, loss, or cost is allowed as a deduction or cost in determining taxable income for 12 
the taxable year under the Internal Revenue Code; 13 
 
 (ii) a loss related to or incurred in connection directly or indirectly 14 
with factoring transactions or discounting transactions; 15 
 
 (iii) a royalty, patent, technical, or copyright fee; 16 
 
 (iv) a licensing fee; or 17 
 
 (v) any other similar expense or cost. 18 
 
 [(6)] (5) “Intangible property” means patents, patent applications, trade 19 
names, trademarks, service marks, copyrights, and similar types of intangible assets. 20 
 
 [(7)] (6) “Interest expense” means an amount directly or indirectly 21 
allowed as a deduction under § 163 of the Internal Revenue Code for purposes of 22 
determining taxable income under the Internal Revenue Code. 23 
 
 [(8)] (7) “Related entity” means a person that, under the attribution rules 24 
of § 318 of the Internal Revenue Code, is: 25 
 
 (i) a stockholder who is an individual or a member of the 26 
stockholder’s family enumerated in § 318 of the Internal Revenue Code, if the stockholder 27 
and the members of the stockholder’s family own directly, indirectly, beneficially, or 28 
constructively, in the aggregate, at least 50% of the value of the taxpayer’s outstanding 29 
stock; 30 
 
 (ii) a stockholder or a stockholder’s partnership, limited liability 31 
company, estate, trust, or corporation, if the stockholder and the stockholder’s partnership, 32 
limited liability company, estate, trust, or corporation own directly, indirectly, beneficially, 33   	HOUSE BILL 337 	7 
 
 
or constructively, in the aggregate, at least 50% of the value of the taxpayer’s outstanding 1 
stock; or 2 
 
 (iii) a corporation or a party related to the corporation in a manner 3 
that would require an attribution of stock from the corporation to the party or from the 4 
party to the corporation under the attribution rules of § 318 of the Internal Revenue Code, 5 
if the taxpayer owns directly, indirectly, beneficially, or constructively, at least 50% of the 6 
value of the corporation’s outstanding stock. 7 
 
 [(9)] (8) “Related member” means a person that, with respect to the 8 
taxpayer during all or any portion of the taxable year, is: 9 
 
 (i) a related entity; 10 
 
 (ii) a component member, as defined in § 1563(b) of the Internal 11 
Revenue Code; or 12 
 
 (iii) a person to or from whom there is attribution of stock ownership 13 
in accordance with § 1563(e) of the Internal Revenue Code. 14 
 
 (b) (1) Except as otherwise provided in this section, in addition to the 15 
modifications under §§ 10–305 and 10–306 of this subtitle, the amounts under paragraph 16 
(2) of this subsection are added to the federal taxable income of a corporation to determine 17 
Maryland modified income. 18 
 
 (2) The addition under this subsection includes any otherwise deductible 19 
interest expense or intangible expense if the interest expense or intangible expense is 20 
directly or indirectly paid, accrued, or incurred to, or in connection directly or indirectly 21 
with one or more direct or indirect transactions with, one or more related members. 22 
 
 (c) The addition required under subsection (b) of this section does not apply to 23 
any portion of the interest expense or intangible expense to the extent that the corporation 24 
establishes BY CLEAR AND CONVINC ING EVIDENCE , as determined by the Comptroller, 25 
that: 26 
 
 (1) the transaction giving rise to the payment of the interest expense or 27 
intangible expense between the corporation and the related member did not have as a 28 
principal purpose the avoidance of any portion of the tax due under this title; 29 
 
 (2) the interest expense or intangible expense was paid pursuant to  30 
arm’s–length contracts at an arm’s–length rate of interest or price; and 31 
 
 (3) (i) during the same taxable year, the related member directly or 32 
indirectly paid, accrued, or incurred the interest expense or intangible expense to a person 33 
who is not a related member; OR 34 
  8 	HOUSE BILL 337  
 
 
 (ii) 1. the related member was subject to a tax measured by its 1 
net income or receipts in this State, another state or possession of the United States, or a 2 
foreign nation that has entered into a comprehensive tax treaty with the United States 3 
government; 4 
 
 2. a measure of the tax imposed by this State, another state 5 
or possession of the United States, or a foreign nation that has entered into a 6 
comprehensive tax treaty with the United States government included the interest expense 7 
or intangible expense received by the related member from the corporation; 8 
 
 3. IF APPLICABLE, THE MEASURE OF ANY T AX IMPOSED  9 
BY A FOREIGN NATION THAT HAS ENTERED INTO A C OMPREHENSIVE TAX TRE ATY 10 
WITH THE UNITED STATES GOVERNMENT WAS EQUAL TO OR GREATER THAN THE 11 
TAX IMPOSED BY THIS STATE; and 12 
 
 [3.] 4. the aggregate effective tax rate imposed on the amounts 13 
received by the related member is equal to or greater than [4%; or 14 
 
 (iii) in the case of an interest expense, the corporation and the related 15 
member are banks] THE TAX RATE SPECIFIED UNDER § 10–105(B) OF THIS TITLE 16 
MINUS 3%, PROVIDED THAT A RELA TED MEMBER RECEIVING THE INTEREST 17 
EXPENSE OR INTANGIBLE EXPENS E IS NOT CONSIDERED TO BE SUBJECT TO A T AX 18 
MERELY BY VIRTUE OF THE RELAT ED MEMBER ’S INCLUSION IN A COM BINED OR 19 
CONSOLIDATED RE PORT IN ONE OR MORE STATE S. 20 
 
 (d) (1) Subject to regulations adopted by the Comptroller, the addition 21 
required under subsection (b) of this section does not apply if, in lieu of the [4%] effective 22 
tax rate requirement under subsection [(c)(3)(ii)3] (C)(3)(II)4 of this section, the aggregate 23 
effective tax rate imposed on the amounts received by the recipient is greater than or equal 24 
to the aggregate effective tax rate that would have been imposed on the additional income 25 
of the payor corporation if the interest expense or intangible expense had not been 26 
deducted. 27 
 
 (2) For purposes of subsection (c)(3)(ii) of this section, the Comptroller may 28 
provide by regulation for an alternative to the effective tax rate requirement of subsection 29 
[(c)(3)(ii)3] (C)(3)(II)4 of this section if: 30 
 
 (i) the related member: 31 
 
 1. is subject in another state or in a foreign nation that has 32 
entered into a comprehensive tax treaty with the United States government to a tax that 33 
is measured by gross receipts or is measured by net capital or net worth; and 34 
 
 2. is not subject in that state or in that foreign nation to a tax 35 
measured by net income or receipts; or 36 
   	HOUSE BILL 337 	9 
 
 
 (ii) under other circumstances demonstrating to the satisfaction of 1 
the Comptroller that avoidance of any portion of the tax due under this title is not a 2 
principal purpose of the transaction giving rise to the payment of the interest expense or 3 
intangible expense between the corporation and the related member, the Comptroller 4 
determines that it is impractical for a related member that is subject to tax in this State, 5 
another state, or a foreign nation that has entered into a comprehensive tax treaty with the 6 
United States government, where the measure of the tax includes the payment to satisfy 7 
the requirements of subsection (c)(3)(ii) of this section. 8 
 
 (e) (1) (I) If the payor and the recipient are both included in a combined or 9 
consolidated report filed in a jurisdiction: 10 
 
 [(1)]  1. for purposes of subsection (c)(3)(ii)2 of this section, the 11 
measure of the tax imposed by that jurisdiction shall be deemed to include the interest 12 
expense or intangible expense; and 13 
 
 [(2)]  2. EXCEPT AS PROVIDED I N SUBPARAGRAPH (II) OF THIS 14 
PARAGRAPH , for purposes of determining the effective rate of tax imposed by the 15 
jurisdiction, the applicable apportionment rate is the lesser of: 16 
 
 [(i)] A. the apportionment rate of the recipient corporation, 17 
determined by using only that corporation’s factors in the numerators and denominators of 18 
the apportionment formula; or 19 
 
 [(ii)] B. the apportionment rate of the combined or consolidated 20 
group, determined by combining the recipient corporation’s factors with the factors of other 21 
members of the group included in the combined or consolidated report.  22 
 
 (II) THE EFFECTIVE RATE OF TAX IMPOSED AS TO AN Y STATE, 23 
POSSESSION OF THE UNITED STATES, OR FOREIGN NATION SHALL BE ZERO IF: 24 
 
 1. THE RELATED MEMBER ’S NET INCOME TAX LIA BILITY 25 
IN THE JURISDICTION IS REPORTED ON A COMBINED OR CONSOLID ATED RETURN 26 
THAT INCLUDES THE PAYOR AND THE RECIPIENT; AND  27 
 
 2. THE REPORTED TRANSAC TIONS BETWEEN THE PAYOR 28 
AND THE RECIPIENT ARE ELIMINATED OR OF FSET. 29 
 
 (2) FOR PURPOSES OF DETER MINING THE EFFECTIVE RATE OF TAX 30 
IMPOSED BY A JURISDI CTION, IF A RELATED MEMBER ’S NET INCOME IS ELIM INATED 31 
OR OFFSET BY A CREDI T OR SIMILAR ADJUSTM ENT THAT IS DEPENDEN T ON THE 32 
RELATED MEMBER EITHE R MAINTAINING OR MAN AGING INTANGIBLE PROPERTY OR 33 
COLLECTING INTEREST INCOME IN THE JURISDICTION, THE MAXIMUM STATUTOR Y 34 
RATE OF TAX IMPOSED BY THE JURISDICTION SHALL BE DECREASED T O REFLECT 35  10 	HOUSE BILL 337  
 
 
THE STATUTORY RATE O F TAX THAT APPLIES T O THE RELATED MEMBER AS 1 
EFFECTIVELY REDUCED BY THE CREDIT OR SIMILAR AD JUSTMENT. 2 
 
 (f) (1) In addition to the modifications under §§ 10–305 and 10–306 of this 3 
subtitle, subject to paragraph (2) of this subsection, to determine Maryland taxable income, 4 
an amount is subtracted from the federal taxable income of a corporation equal to the 5 
amount received as royalties, interest, or similar income from intangibles from a related 6 
member to the extent the related member, with respect to the payment, is subject to the 7 
addition modification under subsection (b) of this section or a similar addition modification 8 
of another state or of a foreign nation that has entered into a comprehensive tax treaty with 9 
the United States government for intangible expenses or interest expenses paid to related 10 
members. 11 
 
 (2) The subtraction modification under this subsection is not allowed to the 12 
extent that: 13 
 
 (i) the transaction giving rise to the payment of the interest expense 14 
or intangible expense had as a principal purpose the avoidance of State income taxes; 15 
 
 (ii) the interest expense or intangible expense was not paid pursuant 16 
to arm’s–length contracts at an arm’s–length rate of interest or price; or 17 
 
 (iii) the aggregate effective tax rate imposed on the amounts received 18 
by the recipient exceeds the aggregate effective tax rate imposed on the income of the payor 19 
corporation. 20 
 
 (g) This section may not be construed: 21 
 
 (1) to require a corporation to include in or add to its net income more than 22 
once any amount of interest expense or intangible expense that the corporation pays, 23 
accrues, or incurs to a related member; or 24 
 
 (2) to limit or negate any other authority provided to the Comptroller under 25 
this article, including: 26 
 
 (i) the authority to make adjustments under § 10–109 or § 10–402(e) 27 
of this title; or 28 
 
 (ii) the authority to enter into agreements and compromises 29 
otherwise allowed by law. 30 
 
 (h) The Comptroller shall adopt any regulations that are necessary or appropriate 31 
to implement this section. 32 
 
10–307. 33 
   	HOUSE BILL 337 	11 
 
 
 (a) To the extent included in federal taxable income, the amounts under this 1 
section are subtracted from the federal taxable income of a corporation to determine 2 
Maryland modified income. 3 
 
 (d) (1) IN THIS SUBSECTION , “DIVIDEND” DOES NOT INCLUDE ANY 4 
AMOUNT TREATED AS A DIVIDEND UNDER § 245 OR § 1248 OF THE INTERNAL 5 
REVENUE CODE. 6 
 
 (2) The subtraction under subsection (a) of this section includes dividends 7 
received from a corporation if: 8 
 
 [(1)] (I) the receiving corporation owns, directly or indirectly, 50% or 9 
more of the paying corporation’s outstanding shares of capital stock; and 10 
 
 [(2)] (II) the paying corporation is organized under the laws of a foreign 11 
government. 12 
 
 SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 13 
1, 2023, and shall be applicable to all taxable years beginning after December 31, 2022. 14