03.04.08.03

.03 Apportionment and Allocation.

A. Except as otherwise specifically provided, a banking institution whose business activity is taxable both within and without this State shall allocate and apportion its income as provided in this regulation.

B. All income which is includable in the Maryland modified income, as defined in Tax-General Article, §10-304, Annotated Code of Maryland, shall be apportioned to this State by multiplying that income by the apportionment percentage. The apportionment percentage is determined by adding the taxpayer's property factor (as described in Regulation .05 of this chapter), payroll factor (as described in Regulation .06 of this chapter), and twice the receipts factor (as described in Regulation .04 of this chapter), together and dividing the sum by four. If any of the factors are missing, the remaining factors are added and the sum is divided by the number of remaining factors. A factor is missing if both its numerator and denominator are zero, but it is not missing merely because its numerator is zero.

C. Miscellaneous.

(1) A financial institution holding company shall allocate its interest income received from subsidiaries described in Regulation .02B(1)(a)(v)—(xi) of this chapter by use of the apportionment formula of the subsidiary that pays the interest.

(2) A financial institution holding company shall apportion all other income to this State through application of this chapter.

D. If the allocation and apportionment provisions of this regulation do not fairly represent the extent of the taxpayer's business activity in this State, the taxpayer may petition for or the Comptroller may require, in respect to all or any part of the taxpayer's business activity, if reasonable:

(1) Separate accounting;

(2) The exclusion of any one or more of the factors;

(3) The inclusion of one or more additional factors which will fairly represent the taxpayer's business activity in this State; or

(4) The employment of any other method to effectuate an equitable allocation and apportionment of the taxpayer's income.