COMAR 03.04.14.01 — § 1 Definitions.

.01 Definitions.
A.
In this chapter, the following terms have the meanings indicated.
B.
Terms Defined.
(1)
“Commercial domicile” means the principal place from which the trade or business of the taxpayer is directed or managed.
(2)
“Corporate group” has the meaning stated in
Tax-General Article, §10-804
.1(a)(1) and (2), Annotated Code of Maryland.
(3)
“Finnigan” means a method of apportioning taxable income of a corporate group whereby the numerator consists of the Maryland receipts, property, and payroll of all members of the corporate group regardless of whether the members have nexus with Maryland and are required to file a Maryland corporate income tax return.
(4)
“Joyce” means a method of apportioning taxable income of a corporate group whereby the numerator consists of the Maryland receipts, property and payroll of all members of the group having nexus in Maryland and required to file a Maryland corporate income tax return.
(5)
“Nonoperational” means income of a corporation that is not earned as a part of the corporation's unitary business.
(6)
“Unitary business” means a business in which the activities of the corporations comprising the business, whether related as a parent and subsidiary or as affiliated corporations related through common ownership, are economically interdependent as demonstrated by the following factors:
(a)
Strong centralized management;
(b)
Functional integration; and
(c)
Attainment of operational economies of scale.
(7)
“Water's edge” means a method for preparing a combined income tax report that includes the income and activities of all members of a corporate group that are in a unitary business and are:
(a)
Corporations organized or incorporated in the United States, including those corporations qualifying for the Puerto Rico and Possession Tax Credit as provided in IRC Section 936 (26 U.S.C. 936); and
(b)
Corporations organized or incorporated outside of the United States whose business activity in the United States is 20 percent or more of the corporation's total business activity. Foreign corporations that conduct 20 percent or more of their business activity in the United States, as measured by the average of the property and payroll factors, shall be included 100 percent in a water's edge combined report. Any business activity in Maryland subjects a foreign corporation to Maryland income tax. The threshold test for purposes of combined reporting determines whether the foreign corporation is a member of a unitary group.