Maryland 2023 Regular Session

Maryland House Bill HB46 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2
3	3	EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
4	4	[Brackets] indicate matter deleted from existing law.
5	5	hb0046
6	6
7	7	HOUSE BILL 46
8	8	Q3 3lr0316
9	9	HB 457/22 – W&M (PRE–FILED) CF 3lr1400
10	10	By: Delegates Lehman, Hill, Palakovich Carr, Pena–Melnyk, Ruth, Solomon, and
11	11	Terrasa
12	12	Requested: August 5, 2022
13	13	Introduced and read first time: January 11, 2023
14	14	Assigned to: Ways and Means
15	15
16	16	A BILL ENTITLED
17	17
18	18	AN ACT concerning 1
19	19
20	20	Corporate Income Tax – Combined Reporting 2
21	21
22	22	FOR the purpose of requiring certain corporations to compute Maryland taxable income 3
23	23	using a certain method; authorizing certain corporations, subject to regulations 4
24	24	adopted by the Comptroller, to determine certain income using a certain method; 5
25	25	requiring, subject to regulations adopted by the Comptroller, certain groups of 6
26	26	corporations to file a combined income tax return reflecting the aggregate income tax 7
27	27	liability of all the members of the group; requiring the Comptroller to adopt certain 8
28	28	regulations consistent with certain regulations adopted by the Multistate Tax 9
29	29	Commission; providing a subtraction modification under the Maryland corporate 10
30	30	income tax for certain changes to a certain combined group’s deferred tax assets or 11
31	31	liabilities that are the result of certain provisions of this Act; prohibiting the 12
32	32	subtraction from being reduced as a result of an event that occurs after the 13
33	33	calculation of the subtraction; providing, under certain circumstances, for the 14
34	34	carryforward of the subtraction; authorizing the Comptroller to review and alter the 15
35	35	amount of the subtraction specified in the statement or claimed on certain tax 16
36	36	returns; and generally relating to the Maryland income tax on corporations. 17
37	37
38	38	BY adding to 18
39	39	Article – Tax – General 19
40	40	Section 10–311 and 10–402.1 20
41	41	Annotated Code of Maryland 21
42	42	(2022 Replacement Volume) 22
43	43
44	44	BY repealing and reenacting, with amendments, 23
45	45	Article – Tax – General 24
46	46	Section 10–811 25
47	47	Annotated Code of Maryland 26
48	48	(2022 Replacement Volume) 27 2 HOUSE BILL 46
49	49
50	50
51	51
52	52	SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
53	53	That the Laws of Maryland read as follows: 2
54	54
55	55	Article – Tax – General 3
56	56
57	57	10–311. 4
58	58
59	59	(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 5
60	60	INDICATED. 6
61	61
62	62	(2) “COMBINED GROUP ” HAS THE MEANING STAT ED IN § 10–402.1 OF 7
63	63	THIS TITLE. 8
64	64
65	65	(3) “NET DEFERRED TAX ASSE T” MEANS THE AMOUNT BY WHICH THE 9
66	66	DEFERRED TAX ASSETS EXCEED TH E DEFERRED TAX LIABI LITIES OF A COMBINED 10
67	67	GROUP, COMPUTED IN ACCORDAN CE WITH GENERALLY AC CEPTED ACCOUNTING 11
68	68	PRINCIPLES. 12
69	69
70	70	(4) “NET DEFERRED TAX LIAB ILITY” MEANS THE AMOUNT BY WHICH 13
71	71	THE DEFERRED TAX LAB ILITIES EXCEED THE D EFERRED TAX ASSE TS OF A 14
72	72	COMBINED GROUP , COMPUTED IN ACCORDAN CE WITH GENERALLY AC CEPTED 15
73	73	ACCOUNTING PRINCIPLE S. 16
74	74
75	75	(B) THIS SECTION APPLIES ONLY TO A COMBINED G ROUP OF WHICH THE 17
76	76	MEMBERS, ON OR BEFORE THE DAT E OF ENACTMENT OF TH E PROVISIONS OF § 18
77	77	10–402.1 OF THIS TITLE BY CHAPTER _____ (H.B. 46) OF THE ACTS OF THE 19
78	78	GENERAL ASSEMBLY OF 2023, WERE: 20
79	79
80	80	(1) PUBLICLY TRADED ; OR 21
81	81
82	82	(2) AFFILIATED WITH A CO MBINED GROUP THAT WA S PUBLICLY 22
83	83	TRADED, AND PARTICIPATED IN THE FILING OF THE PU BLICLY TRADED 23
84	84	CORPORAT ION’S FINANCIAL STATEMEN TS PREPARED IN ACCOR DANCE WITH 24
85	85	GENERALLY ACCEPTED A CCOUNTING PRINCIPLES . 25
86	86
87	87	(C) (1) SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTION , IN ADDITION 26
88	88	TO THE MODIFICATIONS UNDER §§ 10–307 AND 10–308 OF THIS SUBTITLE , THE 27
89	89	AMOUNTS DETERMINED U NDER SUBSECTION (D) OF THIS SECTION ARE 28
90	90	SUBTRACTED FROM THE FEDERAL TAXABLE INCO ME OF A COMBINED GRO UP TO 29
91	91	DETERMINE MARYLAND MODIFIED INC OME OF THE COMBINED GROUP IF, AS OF THE 30
92	92	DATE OF ENACTMENT OF § 10–402.1 OF THIS TITLE BY CHAPTER _____ (H.B. 46) OF 31
93	93	THE ACTS OF THE GENERAL ASSEMBLY OF 2023, THE ENACTMENT RESULT ED IN AN 32
94	94	AGGREGATE : 33 HOUSE BILL 46 3
95	95
96	96
97	97
98	98	(I) INCREASE TO THE COMB INED GROUP’S NET DEFERRED TAX 1
99	99	LIABILITY; 2
100	100
101	101	(II) DECREASE TO THE COMB INED GROUP’S NET DEFERRED TAX 3
102	102	ASSET; OR 4
103	103
104	104	(III) CHANGE FROM A NET DE FERRED TAX ASSET TO A NET 5
105	105	DEFERRED TAX LIABILI TY. 6
106	106
107	107	(2) THE AMOUNT OF ANY INC REASE, DECREASE, OR CHANGE SHALL 7
108	108	BE DETERMINED WITHOU T REGARD TO THE SUBT RACTION AUTHORIZED U NDER 8
109	109	THIS SECTION. 9
110	110
111	111	(D) (1) SUBJECT TO PARAGRAPHS (2) AND (3) OF THIS SUBSECTION , THE 10
112	112	SUBTRACTION AUTHORIZED UNDER THIS SECTION IS EQUA L TO ONE–TENTH OF THE 11
113	113	AMOUNT NECESSARY TO OFFSET THE AGGREGATE : 12
114	114
115	115	(I) INCREASE TO THE COMB INED GROUP’S NET DEFERRED TAX 13
116	116	LIABILITY; 14
117	117
118	118	(II) DECREASE TO THE COMB INED GROUP’S NET DEFERRED TAX 15
119	119	ASSET; OR 16
120	120
121	121	(III) CHANGE FROM A NET DE FERRED TAX ASSET TO A NET 17
122	122	DEFERRED TAX LIABILI TY. 18
123	123
124	124	(2) THE AMOUNT OF THE SUB TRACTION AS DETERMIN ED UNDER 19
125	125	PARAGRAPH (1) OF THIS SUBSECTION S HALL BE: 20
126	126
127	127	(I) DIVIDED BY THE RATE DETERMINED UNDER § 10–105(B) OF 21
128	128	THIS TITLE IN EFFECT ON JANUARY 1, 2025; AND 22
129	129
130	130	(II) FURTHER DIVIDED BY T HE MARYLAND APPORTIONMEN T 23
131	131	FRACTION THAT WAS US ED BY THE COMBINED G ROUP IN THE CALCULAT ION OF THE 24
132	132	DEFERRED TAX ASSETS AND DEFERRED TAX LIA BILITIES AS DESCRIBE D IN 25
133	133	PARAGRAPH (1) OF THIS SUBSECTION . 26
134	134
135	135	(3) THE SUBTRACTION AUTHORIZE D UNDER THIS SECTION MAY BE 27
136	136	USED TO REDUCE THE C OMBINED GROUP ’S MARYLAND MODIFIED INC OME FOR 10 28
137	137	CONSECUTIVE TAXABLE YEARS BEGINNING WITH THE FIRST TAXABLE YE AR THAT 29
138	138	BEGINS AFTER DECEMBER 31, 2029. 30
139	139
140	140	(4) THE SUBTRACTION CALCU LATED UNDER THIS SECTION MAY NOT 31 4 HOUSE BILL 46
141	141
142	142
143	143	BE REDUCED AS A RESU LT OF ANY EVENT THAT OCCURS AFTER THE CAL CULATION, 1
144	144	INCLUDING THE DISPOS ITION OR ABANDONMENT OF ANY ASSET. 2
145	145
146	146	(5) THE SUBTRACTION AUTHO RIZED UNDER THIS SEC TION: 3
147	147
148	148	(I) SHALL BE CALCULATED WITHOUT REGARD TO TH E FEDERAL 4
149	149	TAX EFFECT; AND 5
150	150
151	151	(II) MAY NOT ALTER THE TA X BASIS OF ANY ASSET . 6
152	152
153	153	(6) IF THE SUBTRACTION DE TERMINED UNDER THIS SECTION 7
154	154	RESULTS IN A SUBTRAC TION THAT EXCEEDS MARYLAND MODIFIED INC OME 8
155	155	COMPUTED WITHOUT REG ARD TO THE SUBTRACTI ON UNDER THIS SECTIO N, THE 9
156	156	AMOUNT OF THE EXCESS MAY BE CARRIED FORWA RD TO SUCCEEDING TAX ABLE 10
157	157	YEARS AND USED TO RE DUCE MARYLAND MODIFIED INC OME IN EACH SUCCEEDI NG 11
158	158	TAXABLE YEAR UNTIL T HE EXCESS IS FULLY U SED. 12
159	159
160	160	(E) (1) ON OR BEFORE JULY 1, 2026, A COMBINED GROUP THA T INTENDS 13
161	161	TO CLAIM A SUBTRACTION U NDER THIS SECTION SH ALL FILE WITH THE 14
162	162	COMPTROLLER A STATEMENT THAT SPE CIFIES THE TOTAL AMO UNT OF THE 15
163	163	SUBTRACTION THAT THE COMBINED GROUP INTEN DS TO CLAIM. 16
164	164
165	165	(2) THE STATEMENT SHALL B E ON THE FORM AND CO NTAIN THE 17
166	166	INFORMATION THE COMPTROLLER REQUIRES . 18
167	167
168	168	(3) THE COMPTROLLER MAY REVIE W AND ALTER THE AMOU NT OF: 19
169	169
170	170	(I) THE SUBTRACTION SPEC IFIED IN THE STATEME NT 20
171	171	REQUIRED UNDER PARAG RAPH (1) OF THIS SUBSECTION ; OR 21
172	172
173	173	(II) THE SUBTRACTION CLAI MED ON A TAX RETURN FOR ANY 22
174	174	TAXABLE YEAR . 23
175	175
176	176	10–402.1. 24
177	177
178	178	(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 25
179	179	INDICATED. 26
180	180
181	181	(2) “COMBINED GROUP ” MEANS A GROUP OF COR PORATIONS: 27
182	182
183	183	(I) THAT IS ENGAGED IN A UNITARY BUSINESS ; 28
184	184
185	185	(II) IN WHICH MORE THAN 50% OF THE VOTING STOCK OF EACH 29
186	186	MEMBER IS DIRECTLY OR INDIRECT LY OWNED BY: 30 HOUSE BILL 46 5
187	187
188	188
189	189
190	190	1. A COMMON OWNER OR CO MMON OWNERS , EITHER 1
191	191	CORPORATE OR NONCORP ORATE; OR 2
192	192
193	193	2. ONE OR MORE MEMBER C ORPORATIONS OF THE 3
194	194	GROUP; 4
195	195
196	196	(III) THE MEMBERS OF WHICH ARE SUBJECT TO THE I NCOME TAX 5
197	197	OR WOULD BE SUBJECT TO THE INCOME TAX IF DOING BUSINESS IN THE STATE; AND 6
198	198
199	199	(IV) CONSISTING OF ANY OT HER MEMBERS UNDER TH E 7
200	200	CIRCUMSTANCES AND TO THE EXTENT PROVIDED IN REGULATIONS ADOPT ED BY 8
201	201	THE COMPTROLLER TO PREVEN T THE AVOIDANCE OF T AX OR TO REFLECT CLE ARLY 9
202	202	THE INCOME OF ANY ME MBER OF THE COMBINED GROUP FOR ANY PERIOD . 10
203	203
204	204	(3) “COMBINED RETURN ” MEANS A TAX RETURN F OR THE COMBINED 11
205	205	GROUP CONTAINING INF ORMATION AS PROVIDED IN THIS SECTION OR O THERWISE 12
206	206	REQUIRED BY THE COMPTROLLER . 13
207	207
208	208	(4) “UNITARY BUSINESS ” MEANS A SINGLE ECONO MIC ENTERPRISE 14
209	209	THAT IS MADE EITHER OF SEPARATE PARTS OF A SINGLE BUSINESS EN TITY OR OF A 15
210	210	COMMONLY CONTROLLED GROUP OF BUSINESS EN TITIES THAT ARE SUFF ICIENTLY 16
211	211	INTERDEPENDENT , INTEGRATED, AND INTERRELATED THR OUGH THEIR ACTIVITIE S 17
212	212	SO AS TO PROVIDE MUT UAL BENEFIT THAT PRODUCES A SHARING O R EXCHANGE OF 18
213	213	VALUE AMONG THEM AND A SIGNIFICANT FLOW O F VALUE TO THE SEPAR ATE PARTS. 19
214	214
215	215	(B) (1) THE TERM “UNITARY BUSINESS ” SHALL BE CONSTRUED T O THE 20
216	216	BROADEST EXTENT ALLO WED UNDER THE U.S. CONSTITUTION. 21
217	217
218	218	(2) A BUSINESS CONDUCTED DIRECTLY OR INDIRECT LY BY ONE 22
219	219	CORPORATION IS A UNI TARY BUSINESS WITH R ESPECT TO THAT PORTI ON OF A 23
220	220	BUSINESS CONDUCTED B Y ANOTHER CORPORATIO N THROUGH ITS DIRECT OR 24
221	221	INDIRECT INTEREST IN A PARTNERSHIP IF THE REQUIREMENTS OF SUBS ECTION 25
222	222	(A)(4) OF THIS SECTION AR E SATISFIED, INCLUDING IF THERE I S SYNERGY AND AN 26
223	223	EXCHANGE AND FLOW OF VALUE BETWEEN THE TW O PARTS OF THE BUSIN ESS AND 27
224	224	THE TWO CORPORATIONS ARE MEMBERS OF THE S AME COMMONLY CONTROL LED 28
225	225	GROUP. 29
226	226
227	227	(3) A BUSINESS CONDUCTED B Y A PARTNERSHIP SHAL L BE TREATED 30
228	228	AS CONDUCTED BY ITS PAR TNERS, WHETHER DIRECTLY HEL D OR INDIRECTLY HELD 31
229	229	THROUGH A SERIES OF PARTNERSHIPS , TO THE EXTENT OF THE PARTNER’S 32
230	230	DISTRIBUTIVE SHARE O F THE PARTNERSHIP ’S INCOME, REGARDLESS OF THE 33
231	231	PERCENTAGE OF THE PA RTNER’S OWNERSHIP INTEREST OR ITS DISTRIBUTIVE OR 34
232	232	ANY OTHER SHARE OF P ARTNERSHIP INCOME . 35 6 HOUSE BILL 46
233	233
234	234
235	235
236	236	(C) (1) EXCEPT AS PROVIDED BY AND SUBJECT TO REGUL ATIONS 1
237	237	ADOPTED BY THE COMPTROLLER , FOR ALL TAXABLE YEAR S BEGINNING AFTER 2
238	238	DECEMBER 31, 2024, A CORPORATION ENGAGE D IN A UNITARY BUSIN ESS SHALL 3
239	239	FILE A COMBINED RETURN , REPORTING AND PAYING TAX ON WORLDWIDE TAX ABLE 4
240	240	INCOME AS A COMBINED GROUP, REFLECTING THE AGGRE GATE INCOME TAX 5
241	241	LIABILITY OF ALL MEM BERS OF THE COMBINED GROUP THAT ARE ENGAG ED IN A 6
242	242	UNITARY BUSINESS . 7
243	243
244	244	(2) THE TAXABLE INCOME OF A CORPORATION RE QUIRED TO FILE 8
245	245	UNDER § 10–811(A)(2) OF THIS TITLE IS EQU AL TO THE COMBINED G ROUP’S 9
246	246	MARYLAND MODIFIED INC OME AS ADJUSTED UNDE R SUBSECTION (D)(3) OF THIS 10
247	247	SECTION. 11
248	248
249	249	(D) (1) THE MARYLAND MODIFIED INC OME OF THE COMBINED GROUP 12
250	250	EQUALS THE PRODUCT O F: 13
251	251
252	252	(I) THE COMBINED GROUP ’S APPORTIONABLE MARYLAND 14
253	253	MODIFIED INCOME , AS DETERMINED UNDER PARAGRAPH (2) OF THIS SUBSECTION 15
254	254	AND ADJUSTED UNDER P ARAGRAPH (3) OF THIS SUBSECTION ; AND 16
255	255
256	256	(II) THE COMBINED GROUP ’S MARYLAND APPORTIONMEN T 17
257	257	FACTOR, AS DETERMINED UNDER PARAGRAPH (4) OF THIS SUBSECTION . 18
258	258
259	259	(2) (I) SUBJECT TO SUBPARAGRA PHS (II) THROUGH (IV) OF THIS 19
260	260	PARAGRAPH , THE APPORTIONABLE MARYLAND MODIFIED INC OME OF THE 20
261	261	COMBINED GROUP EQUAL S THE SUM OF THE COR PORATION’S AND EACH MEMBER ’S 21
262	262	MARYLAND MODIFIED INC OME. 22
263	263
264	264	(II) 1. SUBJECT TO SUBSUBPARA GRAPH 2 OF THIS 23
265	265	SUBPARAGRAPH , FOR ANY MEMBER INCOR PORATED IN THE UNITED STATES OR 24
266	266	INCLUDED IN A CONSOL IDATED FEDERAL CORPO RATE INCOME TAX RETU RN, THE 25
267	267	INCOME TO BE INCLUDE D IN THE TOTAL APPOR TIONABLE INCOME OF T HE 26
268	268	COMBINED GROUP IS THE MARYLAND MODIFIED INC OME AS CALCULATED UN DER § 27
269	269	10–304 OF THIS TITLE. 28
270	270
271	271	2. THE INCOME OF EACH ME MBER SHALL BE 29
272	272	CALCULATED ON A SEPA RATE RETURN BASIS AS IF THE MEMBER WERE N OT 30
273	273	CONSOLIDATED FOR FED ERAL INCOME TAX PURP OSES. 31
274	274
275	275	(III) 1. FOR ANY MEMBE R NOT INCLUDED UNDER 32
276	276	SUBPARAGRAPH (II) OF THIS PARAGRAPH , THE INCOME TO BE INC LUDED IN THE 33
277	277	TOTAL INCOME OF THE COMBINED GROUP IS DE TERMINED AS PROVIDED UNDER 34
278	278	THIS SUBPARAGRAPH . 35 HOUSE BILL 46 7
279	279
280	280
281	281
282	282	2. A PROFIT AND LOSS STAT EMENT SHALL BE PREPA RED 1
283	283	FOR EACH FOREIGN BRA NCH OR CORPORATION IN THE CURRENCY IN WHICH TH E 2
284	284	BOOKS OF ACCOUNT OF THE BRANCH OR CORPOR ATION ARE REGULARLY 3
285	285	MAINTAINED. 4
286	286
287	287	3. THE PROFIT AND LOSS S TATEMENT SHALL BE 5
288	288	ADJUSTED TO CONFORM TO GENERALLY ACCEPTE D ACCOUNTING PRINCIP LES AS 6
289	289	ADOPTED BY THE UNITED STATES FINANCIAL ACCOUNTING STANDARDS BOARD 7
290	290	FOR THE PREPARATION OF THE PROFIT AND LO SS STATEMENTS , EXCEPT AS 8
291	291	MODIFIED BY REGULATI ON. 9
292	292
293	293	4. EXCEPT AS OTHERWISE P ROVIDED BY REGULATIO N, 10
294	294	THE PROFIT AND LOSS STATEMENT OF EACH ME MBER OF THE COMBINED GROUP, 11
295	295	AND THE APPORTIONMENT FA CTORS RELATED TO EAC H STATEMENT , WHETHER 12
296	296	UNITED STATES OR FOREIGN , SHALL BE TRANSLATED INTO THE CURRENCY IN 13
297	297	WHICH THE PARENT COM PANY MAINTAINS ITS B OOKS AND RECORDS . 14
298	298
299	299	5. INCOME APPORTIONED TO THIS STATE SHALL BE 15
300	300	EXPRESSED IN UNITED STATES DOLLARS . 16
301	301
302	302	(IV) IF A UNITARY BUSINESS INCLUDES INCOME FROM A 17
303	303	PARTNERSHIP , THE INCOME TO BE INC LUDED IN THE TOTAL I NCOME OF THE 18
304	304	COMBINED GROUP EQUAL S THE DIRECT AND IND IRECT DISTRIBUTIVE S HARE OF 19
305	305	THE PARTNERSHIP ’S UNITARY BUSINESS I NCOME ALLOCATED TO ANY MEMBER OF 20
306	306	THE COMBINED GROUP . 21
307	307
308	308	(3) THE COMBINED GROUP ’S APPORTIONABLE MARYLAND MODIFIED 22
309	309	INCOME SHALL BE ADJU STED TO ELIMINATE IN TERCOMPANY TRANSACTI ONS AS 23
310	310	DETERMINED UNDER THE INTERNAL REVENUE CODE. 24
311	311
312	312	(4) (I) SUBJECT TO SUBPARAGRA PH (II) OF THIS PARAGRAPH , THE 25
313	313	COMBINED GROUP ’S MARYLAND APPORTIONMEN T FACTOR IS A FRACTI ON: 26
314	314
315	315	1. THE NUMERATOR OF WHI CH IS THE SUM OF THE 27
316	316	CORPORATION ’S AND EACH MEMBER ’S MARYLAND FACTORS UNDE R § 10–402 OF 28
317	317	THIS SUBTITLE; AND 29
318	318
319	319	2. THE DENOMINATOR OF W HICH IS THE SUM OF THE 30
320	320	CORPORATION ’S AND EACH MEMBER ’S FACTORS UNDER § 10–402 OF THIS SUBTITLE. 31
321	321
322	322	(II) THE APPORTIONMENT FAC TORS OF PASS –THROUGH 32
323	323	ENTITY MEMBERS ARE I NCLUDED IN THE NUMER ATOR UNDER SUBPARAGR APH (I)1 33
324	324	OF THIS PARAGRAPH AN D THE DENOMINATOR UN DER SUBPARAGRAPH (I)2 OF THIS 34 8 HOUSE BILL 46
325	325
326	326
327	327	PARAGRAPH TO THE EXT ENT OF THE CORPORATI ON’S DIRECT AND INDIREC T 1
328	328	DISTRIBUTIVE SHARE OF THAT ENT ITY. 2
329	329
330	330	(E) (1) SUBJECT TO REGULATION S ADOPTED BY THE COMPTROLLER , A 3
331	331	CORPORATION THAT IS PART OF A COMBINED GROUP MAY ELECT TO DETERMINE ITS 4
332	332	INCOME DERIVED FROM OR ATTRIBUTABLE TO T RADE OR BUSINESS IN THE STATE 5
333	333	USING THE WATER ’S EDGE METHOD AS DESCRIBED IN THIS SUBSECTION . 6
334	334
335	335	(2) UNDER THE WATER ’S EDGE METHOD , THE COMBINED GROUP FOR 7
336	336	PURPOSES OF THE COMB INED REPORTING METHO D REQUIRED UNDER THI S 8
337	337	SECTION SHALL INCLUD E ONLY THE FOLLOWING AFFILIATED ENTITIES : 9
338	338
339	339	(I) CORPORATIONS THAT AR E INCORPORATED IN THE UNITED 10
340	340	STATES, EXCLUDING CORPORATIO NS MAKING AN ELECTIO N UNDER §§ 931 11
341	341	THROUGH 934 OF THE INTERNAL REVENUE CODE; 12
342	342
343	343	(II) DOMESTIC INTERNATION AL SALES CORPORATION S, AS 13
344	344	DESCRIBED IN §§ 991 THROUGH 994 OF THE INTERNAL REVENUE CODE; 14
345	345
346	346	(III) ANY CORPORATION OTHER THAN A BANK, REGARDLESS OF 15
347	347	THE PLACE WHERE IT I S INCORPORATED , IF THE AVERAGE OF TH E CORPORATION ’S 16
348	348	PROPERTY, PAYROLL, AND SALES FACTORS WI THIN THE UNITED STATES IS 20% OR 17
349	349	MORE; 18
350	350
351	351	(IV) EXPORT TRADE CORPORA TIONS, AS DESCRIBED IN §§ 970 19
352	352	AND 971 OF THE INTERNAL REVENUE CODE; 20
353	353
354	354	(V) A FOREIGN CORPORATIO N DERIVING GAIN OR L OSS FROM 21
355	355	DISPOSITION OF AN IN TEREST IN REAL PROPE RTY IN THE UNITED STATES TO THE 22
356	356	EXTENT RECOGNIZED UN DER § 897 OF THE INTERNAL REVENUE CODE; AND 23
357	357
358	358	(VI) UNDER THE CIRCU MSTANCES AND TO THE EXTENT 24
359	359	PROVIDED BY REGULATI ONS THAT THE COMPTROLLER ADOPTS : 25
360	360
361	361	1. A CORPORATION NOT DE SCRIBED IN ITEMS (I) 26
362	362	THROUGH (V) OF THIS PARAGRAPH TO THE EXTENT OF THE CO RPORATION’S INCOME 27
363	363	DERIVED FROM OR ATTR IBUTABLE TO SOURCES WITHIN THE UNITED STATES AND 28
364	364	THE CORPORATION ’S FACTORS ASSIGNABLE TO A LOCATION WITHIN THE UNITED 29
365	365	STATES; OR 30
366	366
367	367	2. AN AFFILIATED CORPOR ATION THAT IS A 31
368	368	CONTROLLED FOREIGN C ORPORATION , AS DEFINED IN § 957 OF THE INTERNAL 32
369	369	REVENUE CODE. 33
370	370	HOUSE BILL 46 9
371	371
372	372
373	373	(3) THE USE OF THE WATER ’S EDGE METHOD IS SUBJECT TO THE 1
374	374	TERMS AND CONDITIONS THAT THE COMPTROLLER REQUIRES BY REGULATION , 2
375	375	INCLUDING ANY CONDIT IONS THAT ARE NECESS ARY OR APPROPRIATE T O PREVENT 3
376	376	THE AVOIDANCE OF TAX OR TO REFLECT CLEARL Y THE INCOME FOR ANY PERIOD. 4
377	377
378	378	(F) (1) (I) AN ELECTION TO USE THE WATER ’S EDGE METHOD IN 5
379	379	ACCORDANCE WITH SUBS ECTION (E) OF THIS SECTION IS E FFECTIVE ONLY IF MAD E 6
380	380	ON A TIMELY FILED OR IGINAL RETURN FOR A TAX YEAR BY EVERY ME MBER OF THE 7
381	381	UNITARY BUSINESS . 8
382	382
383	383	(II) THE COMPTROLLER SHALL DEV ELOP REGULATIONS 9
384	384	GOVERNIN G THE IMPACT, IF ANY, ON THE SCOPE OR APPL ICATION OF AN ELECTI ON 10
385	385	TO USE THE WATER ’S EDGE METHOD , INCLUDING TERMINATIO N OR DEEMED 11
386	386	ELECTION, RESULTING FROM A CHA NGE IN THE COMPOSITI ON OF THE UNITARY 12
387	387	BUSINESS, THE COMBINED GROUP , THE TAXPAYER MEMBERS , OR ANY OTHER 13
388	388	SIMILAR CHANGE . 14
389	389
390	390	(2) AN ELECTION TO USE TH E WATER’S EDGE METHOD SHALL 15
391	391	CONSTITUTE CONSENT T O THE REASONABLE PRO DUCTION OF DOCUMENTS AND 16
392	392	TAKING OF DEPOSITION S IN ACCORDANCE WITH THE MARYLAND RULES. 17
393	393
394	394	(3) AT THE DISCRETION OF THE COMPTROLLER , AN ELECTION TO 18
395	395	USE THE WATER ’S EDGE METHOD MAY BE DISREGARDED IN PART OR IN WHOLE, AND 19
396	396	THE INCOME AND APPOR TIONMENT FACTORS OF ANY MEMBER OF THE TA XPAYER’S 20
397	397	UNITARY GROUP MAY BE INCLUDED IN THE COMB INED REPORT WITHOUT REGARD 21
398	398	TO THE PROVISIONS OF THIS SECTION, IF ANY MEMBER OF THE UNITARY GROUP 22
399	399	FAILS TO COMPLY WITH ANY PROVISION OF THI S SECTION OR IF A PE RSON 23
400	400	OTHERWISE NOT INCLUD ED IN THE WATER ’S EDGE COMBINED GROU P WAS AVAILED 24
401	401	OF A SUBSTANTIAL OBJ ECTIVE OF AVOIDING STATE INCOME TAX . 25
402	402
403	403	(4) (I) SUBJECT TO SUBPAR AGRAPHS (II) THROUGH (IV) OF THIS 26
404	404	PARAGRAPH , AN ELECTION TO USE T HE WATER’S EDGE METHOD IS BIN DING FOR 27
405	405	AND APPLICABLE TO TH E TAXABLE YEAR IN WH ICH THE ELECTION IS MADE AND ALL 28
406	406	TAXABLE YEARS THEREA FTER FOR A PERIOD OF 10 YEARS. 29
407	407
408	408	(II) AN ELECTION TO USE T HE WATER’S EDGE METHOD MAY BE 30
409	409	WITHDRAWN OR REINSTI TUTED AFTER WITHDRAW AL, BEFORE THE EXPIRATIO N OF 31
410	410	THE 10–YEAR PERIOD, ONLY ON WRITTEN REQU EST FOR REASONABLE C AUSE AND 32
411	411	ONLY WITH THE WRITTE N PERMISSION OF THE COMPTROLLER . 33
412	412
413	413	(III) IF THE COMPTROLLER GRANTS A WITHDRAWAL OF THE 34
414	414	ELECTION UNDER SUBPA RAGRAPH (II) OF THIS PARAGRAPH , THE COMPTROLLER 35
415	415	SHALL IMPOSE REASONA BLE CONDITIONS AS NE CESSARY TO PREVENT T HE EVASION 36
416	416	OF TAX OR TO CLEARLY REFLECT INCOME FOR T HE ELECTION PERIOD B EFORE OR 37 10 HOUSE BILL 46
417	417
418	418
419	419	AFTER THE WITHDRAWAL . 1
420	420
421	421	(IV) 1. SUBJECT TO SUBSUBPARA GRAPH 2 OF THIS 2
422	422	SUBPARAGRAPH , ON THE EXPIRATION OF THE 10–YEAR PERIOD, A TAXPAYER MAY 3
423	423	WITHDRAW FROM THE EL ECTION TO USE THE WA TER’S EDGE METHOD . 4
424	424
425	425	2. THE WITHDRAWAL SHALL BE MADE IN WRITING 5
426	426	WITHIN 1 YEAR BEFORE THE EXPI RATION OF THE ELECTION AN D IS BINDING FOR A 6
427	427	PERIOD OF 10 YEARS, SUBJECT TO THE SAME CONDITIONS AS APPLIE D TO THE 7
428	428	ORIGINAL ELECTION . 8
429	429
430	430	3. IF NO WITHDRAWAL IS P ROPERLY MADE UNDER T HIS 9
431	431	SUBPARAGRAPH , THE ELECTION TO USE THE WATER ’S EDGE METHOD SHALL 10
432	432	REMAIN IN EF FECT FOR AN ADDITION AL 10–YEAR PERIOD, SUBJECT TO THE SAME 11
433	433	CONDITIONS AS APPLIE D TO THE ORIGINAL EL ECTION. 12
434	434
435	435	(G) (1) THE COMPTROLLER SHALL ADO PT REGULATIONS THAT ARE 13
436	436	NECESSARY AND APPROP RIATE TO CARRY OUT T HIS SECTION. 14
437	437
438	438	(2) THE REGULATIONS ADOPT ED BY THE COMPTROLLER SHALL BE 15
439	439	CONSISTENT WITH THE “PRINCIPLES FOR DETERMINING THE EXISTENCE OF A 16
440	440	UNITARY BUSINESS” (REG. IV.1.(B)) OF THE MODEL GENERAL ALLOCATION AND 17
441	441	APPORTIONMENT REGULATIONS, AS ADOPTED BY THE MULTISTATE TAX 18
442	442	COMMISSION. 19
443	443
444	444	10–811. 20
445	445
446	446	(A) (1) [Each member of] EXCEPT AS PROVIDED BY AND SUBJECT TO 21
447	447	REGULATIONS ADOPTED BY THE COMPTROLLER , an affiliated group of corporations 22
448	448	[shall file a separate income tax return] ENGAGED IN A UNITARY BUSINESS SHALL FILE 23
449	449	A COMBINED INCOME TA X RETURN REFLECTING THE AGGRE GATE INCOME TAX 24
450	450	LIABILITY OF ALL THE MEMBERS OF THE AFFIL IATED GROUP THAT ARE ENGAGED IN 25
451	451	A UNITARY BUSINESS . 26
452	452
453	453	(2) THE RETURN REQUIRED U NDER PARAGRAPH (1) OF THIS 27
454	454	SUBSECTION SHALL INC LUDE THE INCOME AND APPORTIONMENT FACTOR S 28
455	455	DETERMINED UNDER § 10–402.1(D) AND (E) OF THIS TITLE, AND ANY OTHER 29
456	456	INFORMATION REQUIRED BY THE COMPTROLLER , FOR ALL MEMBERS OF T HE 30
457	457	COMBINED GROUP WHERE VER LOCATED OR DOING BUSINESS. 31
458	458
459	459	(3) (I) EXCEPT AS PROVIDED IN SUBPARAGRAPH (II) OF THIS 32
460	460	PARAGRAPH , THE COMBINED RETURN SHALL BE FILE D UNDER THE NAME AND 33
461	461	FEDERAL EMPLOYER IDE NTIFICATION NUMBER O F THE PARENT CORPORA TION IF 34
462	462	THE PARENT IS A MEMB ER OF THE COMBINED G ROUP. 35 HOUSE BILL 46 11
463	463
464	464
465	465
466	466	(II) IF THERE IS NO PARENT CORPORATION OR IF TH E PARENT 1
467	467	IS NOT A MEMBER OF T HE COMBINED GROUP , THE MEMBERS OF THE C OMBINED 2
468	468	GROUP SHALL CHOOSE A MEMBER TO FILE THE R ETURN. 3
469	469
470	470	(III) THE FILING MEMBER UND ER SUBPARAGRAPH (I) OR (II) OF 4
471	471	THIS PARAGRAPH SHALL CONTINUE TO FILE THE COMBINED RETURN UNLE SS THE 5
472	472	FILING MEMBER IS NO LONGER THE PARENT CO RPORATION OR NO LONG ER A 6
473	473	MEMBER OF THE COMBINED GR OUP. 7
474	474
475	475	(4) THE RETURN SHALL BE S IGNED BY A RESPONSIB LE OFFICER OF 8
476	476	THE FILING MEMBER ON BEHALF OF THE COMBIN ED GROUP MEMBERS . 9
477	477
478	478	(5) MEMBERS OF THE COMBIN ED GROUP ARE JOINTLY AND 10
479	479	SEVERALLY LIABLE FOR THE TAX LIABILITY OF THE COMBINED GR OUP INCLUDED 11
480	480	IN THE COMBINED RETU RN. 12
481	481
482	482	(B) (1) THE COMPTROLLER MAY , BY REGULATION , REQUIRE THAT THE 13
483	483	COMBINED RETURN INCL UDE THE INCOME AND A SSOCIATED APPORTIONM ENT 14
484	484	FACTORS OF ENTITIES THAT ARE NOT INCLUDE D IN THE COMBINED RE PORT BUT 15
485	485	THAT ARE MEMBERS OF A UNITARY BUSINESS IN O RDER TO REFLECT PROP ER 16
486	486	APPORTIONMENT OF INC OME OF THE ENTIRE UN ITARY BUSINESS. 17
487	487
488	488	(2) IF THE COMPTROLLER DETERMINE S THAT THE REPORTED 18
489	489	INCOME OR LOSS OF A TAXPAYER ENGAGED IN A UNITARY BUSINESS W ITH A MEMBER 19
490	490	NOT INCLUDED IN THE COMBINED GROUP REPRESENTS AN AVOIDANCE OR EVASION 20
491	491	OF TAX, THE COMPTROLLER MAY , ON A CASE–BY–CASE BASIS, REQUIRE THAT ALL 21
492	492	OR PART OF THE INCOM E AND ASSOCIATED APP ORTIONMENT FACTORS O F THE 22
493	493	MEMBER BE INCLUDED I N THE TAXPAYER ’S COMBINED RETURN . 23
494	494
495	495	(3) THE COMPTROLLER M AY REQUIRE: 24
496	496
497	497	(I) THE EXCLUSION OF ONE OR MORE FACTORS , THE 25
498	498	INCLUSION OF ONE OR MORE ADDITIONAL FACT ORS, OR THE EMPLOYMENT OF ANY 26
499	499	OTHER METHOD THAT WI LL FAIRLY REPRESENT THE TAXPAYER ’S BUSINESS IN THIS 27
500	500	STATE; OR 28
501	501
502	502	(II) THE EMPLOYMENT OF AN Y OTHER METHO D TO EFFECTUATE 29
503	503	A PROPER REFLECTION OF THE TOTAL AMOUNT OF INCOME SUBJECT TO 30
504	504	APPORTIONMENT AND AN EQUITABLE ALLOCATION AND APPORTIONMENT OF THE 31
505	505	COMBINED GROUP ’S OR ITS MEMBERS ’ INCOME. 32
506	506
507	507	(C) THE COMPTROLLER SHALL ADO PT REGULATIONS THAT ARE 33
508	508	NECESSARY AND APPROPRIATE TO CARRY OUT THIS SECTION . 34 12 HOUSE BILL 46
509	509
510	510
511	511
512	512	SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 1
513	513	1, 2024, and shall be applicable to all taxable years beginning after December 31, 2024. 2
514	514