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<section article="gtg" article_name="Tax - General" number="10-402" title_number="10" title_name="Income Tax" subtitle_number="4" subtitle_name="Special Treatment of Income">
  <level label="a">
    <text>In this section, “worldwide headquartered company” means a corporation included in a group of corporations including a parent corporation that:</text>
    <level label="1">
      <text>filed a Form 10–Q with the Securities and Exchange Commission for the quarterly period ending June 30, 2017;</text>
    </level>
    <level label="2">
      <text>has its principal executive office in the State; and</text>
    </level>
    <level label="3">
      <level label="i">
        <text>employs at all times between July 1, 2017, and June 30, 2020, at least 500 full–time employees at the parent corporation’s principal executive office that is located within the State; or</text>
      </level>
      <level label="ii">
        <text>if the parent corporation is a franchisor, is part of a group of corporations that employs at all times between July 1, 2017, and June 30, 2020, at least 400 full–time employees at the parent corporation’s principal executive office that is located within the State.</text>
      </level>
    </level>
  </level>
  <level label="b">
    <text>In computing Maryland taxable income, a corporation shall allocate Maryland modified income derived from or reasonably attributable to its trade or business in this State in the following manner:</text>
    <level label="1">
      <text>if a corporation carries on its trade or business wholly within the State, the corporation shall allocate to the State all of the Maryland modified income of the corporation; and</text>
    </level>
    <level label="2">
      <text>if a corporation carries on its trade or business within and outside the State, the corporation shall allocate to the State the part of the corporation’s Maryland modified income that is derived from or reasonably attributable to the part of its trade or business carried on in the State, in the manner required in subsection (c), (d), or (e) of this section.</text>
    </level>
  </level>
  <level label="c">
    <level label="1">
      <text>Except as provided in subsection (d) or (e) of this section, the part of the corporation’s Maryland modified income derived from or reasonably attributable to trade or business carried on in the State may be determined by separate accounting if practicable.</text>
    </level>
    <level label="2">
      <text>If in any taxable year a corporation is permitted or required to use the separate accounting method in determining all or a portion of its Maryland taxable income, the portion that is separately accounted for to Maryland shall be taxable whether or not the Maryland modified income of the corporation for the taxable year is zero or less.</text>
    </level>
  </level>
  <level label="d">
    <level label="1">
      <level label="i">
        <text>In this paragraph:</text>
        <level label="1">
          <text>“manufacturing corporation” means a domestic or foreign corporation which is primarily engaged in activities that, in accordance with the North American Industrial Classification System (NAICS), United States Manual, United States Office of Management and Budget, 1997 Edition, would be included in Sector 11, 31, 32, or 33; and</text>
        </level>
        <level label="2">
          <text>“manufacturing corporation” does not include a refiner, as defined in § 10–101 of the Business Regulation Article.</text>
        </level>
      </level>
      <level label="ii">
        <text>If a manufacturing corporation carries on its trade or business within and outside the State and the trade or business is a unitary business, the part of the corporation’s Maryland modified income derived from or reasonably attributable to trade or business carried on in the State shall be determined using a single sales factor apportionment formula, by multiplying its Maryland modified income by 100% of the sales factor.</text>
      </level>
      <level label="iii">
        <text>In filing its tax return for each year, a manufacturing corporation shall certify that the NAICS Code reported on its Maryland return is consistent with that reported to other government agencies.</text>
      </level>
      <level label="iv">
        <text>If the Comptroller determines that a corporation has submitted information that incorrectly classifies the corporation as a manufacturing corporation under subparagraph (i) of this paragraph, the Comptroller shall reclassify the corporation in an appropriate manner.</text>
      </level>
    </level>
    <level label="2">
      <text>Except as provided in paragraphs (1) and (3) of this subsection:</text>
      <level label="i">
        <text>for a taxable year beginning after December 31, 2017, but before January 1, 2019, if the trade or business is a unitary business, the part of the corporation’s Maryland modified income derived from or reasonably attributable to trade or business carried on in the State shall be determined using a 3–factor apportionment fraction:</text>
        <level label="1">
          <text>the numerator of which is the sum of the property factor, the payroll factor, and 3 times the sales factor; and</text>
        </level>
        <level label="2">
          <text>the denominator of which is 5;</text>
        </level>
      </level>
      <level label="ii">
        <text>for a taxable year beginning after December 31, 2018, but before January 1, 2020, if the trade or business is a unitary business, the part of the corporation’s Maryland modified income derived from or reasonably attributable to trade or business carried on in the State shall be determined using a 3–factor apportionment fraction:</text>
        <level label="1">
          <text>the numerator of which is the sum of the property factor, the payroll factor, and 4 times the sales factor; and</text>
        </level>
        <level label="2">
          <text>the denominator of which is 6;</text>
        </level>
      </level>
      <level label="iii">
        <text>for a taxable year beginning after December 31, 2019, but before January 1, 2021, if the trade or business is a unitary business, the part of the corporation’s Maryland modified income derived from or reasonably attributable to trade or business carried on in the State shall be determined using a 3–factor apportionment fraction:</text>
        <level label="1">
          <text>the numerator of which is the sum of the property factor, the payroll factor, and 5 times the sales factor; and</text>
        </level>
        <level label="2">
          <text>the denominator of which is 7;</text>
        </level>
      </level>
      <level label="iv">
        <text>for a taxable year beginning after December 31, 2020, but before January 1, 2022, if the trade or business is a unitary business, the part of the corporation’s Maryland modified income derived from or reasonably attributable to trade or business carried on in the State shall be determined using a 3–factor apportionment fraction:</text>
        <level label="1">
          <text>the numerator of which is the sum of the property factor, the payroll factor, and 6 times the sales factor; and</text>
        </level>
        <level label="2">
          <text>the denominator of which is 8; and</text>
        </level>
      </level>
      <level label="v">
        <text>for a taxable year beginning after December 31, 2021, if the trade or business is a unitary business, the part of the corporation’s Maryland modified income derived from or reasonably attributable to trade or business carried on in the State shall be determined using a single sales factor apportionment formula, by multiplying its Maryland modified income by 100% of the sales factor.</text>
      </level>
    </level>
    <level label="3">
      <level label="i">
        <text>Each year a worldwide headquartered company that filed a federal corporate income tax return for the taxable year may elect to calculate its Maryland modified income derived from or reasonably attributable to trade or business carried on in the State using a 3–factor apportionment fraction:</text>
        <level label="1">
          <text>the numerator of which is the sum of the property factor, the payroll factor, and twice the sales factor; and</text>
        </level>
        <level label="2">
          <text>the denominator of which is 4.</text>
        </level>
      </level>
      <level label="ii">
        <text>To determine under subparagraph (i) of this paragraph the Maryland modified income of a corporation or group of corporations that is a worldwide headquartered company that filed a federal corporate income tax return for the taxable year, gross income from intangible investments, including dividends, interest, royalties, and capital gains from the sale of intangible property, shall be included in the calculation of the numerator based on the average of the property and payroll factors.</text>
      </level>
    </level>
    <level label="4">
      <text>The property factor under paragraphs (2) and (3) of this subsection shall include:</text>
      <level label="i">
        <text>rented and owned real property; and</text>
      </level>
      <level label="ii">
        <text>tangible personal property located in the State and used in the trade or business.</text>
      </level>
    </level>
  </level>
  <level label="e">
    <text>To reflect clearly the income allocable to Maryland, the Comptroller may alter, if circumstances warrant, the methods under subsections (c) and (d) of this section, including:</text>
    <level label="1">
      <text>the use of the separate accounting method;</text>
    </level>
    <level label="2">
      <text>the use of the 3–factor double weighted sales factor formula method or the single sales factor formula method;</text>
    </level>
    <level label="3">
      <text>the weight of any factor in the 3–factor formula;</text>
    </level>
    <level label="4">
      <text>the valuation of rented property included in the property factor; and</text>
    </level>
    <level label="5">
      <text>the determination of the extent to which tangible personal property is located in the State.</text>
    </level>
  </level>
</section>
