§ 10-222

# (a)

In this section, “tax preference items” mean the items that:

# (1)

total more than $10,000 for an individual return or $20,000 for a joint return;

# (2)

are defined under § 57 of the Internal Revenue Code;

# (3)

are modified and apportioned under § 59 of the Internal Revenue Code; and

# (4)

are further modified by excluding:

(i) the oil percentage depletion allowance claimed under § 613 or § 613A of the Internal Revenue Code; and

(ii) interest described in § 57(a)(5) of the Internal Revenue Code, if the interest is attributable to obligations of:
1. the State of Maryland;
2. a political subdivision or authority of the State; or
3. any other entity authorized under Maryland law to issue obligations the interest on which is excluded from gross income under § 103 of the Internal Revenue Code.

# (b)

Each shareholder of an S corporation shall report the shareholder’s pro rata share of the tax preference items of the corporation.

# (c)

# (1)

A nonresident shall include as tax preference items only those items that are based on income taxable in the State.

# (2)

If the tax preference items are based on income derived both in and out of the State, the nonresident shall include only a fraction:

(i) the numerator of which is the dollar amount of the tax preference items based on income taxable in the State; and

(ii) the denominator of which is the total dollar amount of the tax preference items.