Instructions For Form 500 - Maryland Corporation Income Tax Return

INSTRUCTIONS FOR

MARYLAND

FORM 500

CORPORATION INCOME TAX RETURN

2011

GENERAL INSTRUCTIONS

• P a s s - t h r o u g h e n t i t i e s d e f i n e d

a s

requirements for nonprofit organizations.

partnerships in IRC Section 761, S corpo-

• Investment conduits such as a Regulated

rations in IRC Sections 1361 and 1362,

FILING FORM 500

Investment Company (RIC), and a Real

limited liability companies (LLC) in Maryland

Estate Mortgage Investment Conduit

Purpose of Form

Form 500 is used by a

Corporations and Associations Article Section

(REMIC), except those with taxable income

4A-101 and business trusts in Maryland

corporation and certain other organizations to

for federal purposes. Investment conduits

Corporation and Associations Article Section

file an income tax return for a specific tax year

with such taxable income must file Form 500

12-101.

or period.

reporting the taxable income. Real Estate

LLCs and Business Trusts are treated as

Investment Trust should see Special

NOTE: S corporations must use Form 510 —

partnerships for Maryland income tax purposes,

Requirements For Certain Organizations.

Maryland Pass-Through Entity Income Tax

Return. (See inside front cover of this tax

unless they are treated as corporations for

• Individual retirement account (IRA) trusts

booklet to request forms.)

federal income tax purposes.

that are exempt from taxation under IRC

Taxpayers Required to File Every Maryland

Pass-through entities must file an income tax

Section 408 (e)(1), except those with taxable

corporation must file an income tax return on

return on Form 510. Additionally, each member

income for federal purposes. IRA trusts with

must file an income tax return.

such taxable income must file Form 504

Form 500, even if it has no taxable income or if

reporting the taxable income.

the corporation is inactive. Every other

An S corporation that is subject to federal

corporation that is subject to Maryland income

income tax at the corporate level, is also subject

• Insurance companies within the meaning of

tax law and has income or losses attributable to

to Maryland corporation income tax and Form

the Insurance Article, Annotated Code of

sources within Maryland must also file Form

500 must be filed.

Maryland, Managed Care Organizations and

500.

Health Maintenance Organizations are

Maryland will follow the IRS rules for a single

Corporations operating in Maryland and in

subject to the insurance company premium

member LLC that is disregarded as a separate

tax. Insurance companies must contact the

one or more other states are subject to Maryland

entity (“check-the-box”) and certain partnerships

Maryland Insurance Administration regarding

income tax if their Maryland activity exceeds the

that do not actively conduct a business and

filing requirements and taxation. (See back

provisions for federal protection from state

have elected not to be treated as a partnership.

taxation. U.S.C.A. Title 15, Section 381 of the

cover of tax booklet for address and phone

For additional information regarding the

Interstate Commerce Tax Act (P.L. 86-272)

number.)

taxation and filing requirements of pass-through

prescribes the extent of business activity

• Common trust funds as defined in the

entities, see the instructions provided with Form

required before states may impose income

Maryland Financial Institutions Article Section

510. (See inside front cover of tax booklet to

taxes.

3-501(b).

request information and forms.)

A multistate corporation that operates in

• Fiduciary taxpayers must file an income tax

• Nonprofit organizations that are exempt

Maryland but is not subject to the Maryland

return on Form 504. For additional information

from taxation under IRC Section 501, except

income tax law is not required to file, although a

contact the Maryland Revenue Administration

those with taxable income for federal

return reflecting an apportionment factor of zero

Division. (See back cover of tax booklet for

purposes, such as unrelated business taxable

may be filed for record purposes. Letters in lieu

address and phone number.)

income or exempt function income under IRC

of filing will not be accepted.

Section 527.

All financial institutions are subject to

SPECIAL REQUIREMENTS FOR

Under Section 501, a variety of organizations,

corporation income tax and have spe cial

CERTAIN ORGANIZATIONS

generally nonprofit groups organized for

apportionment rules. See Maryland Tax Reg u la-

charitable or mutual benefit purposes, are

tion 03.04.08.

• Affiliated corporations that file consolidated

exempt from income taxation. However, they

federal returns must file separate Maryland

When and Where to File File Form 500 by

may be subject to income tax if they have

returns for each member corporation. Each

the 15th day of the 3rd month following the

income from the operation of a business not

member corporation must file and report the

close of the tax year or period, or by the original

related to the purpose for which they received

taxable income or loss on a separate basis,

due date required for filing the federal return.

their exemption.

without regard to the consolidation for federal

The return must be filed with the Comptroller of

income tax purposes. Consolidation

The same tax treatment that is afforded for

Maryland, Revenue Administration Division,

adjustments report ed for federal purposes

federal income tax purposes is afforded for

Annapolis, Maryland 21411-0001.

are not allowed for Maryland purposes.

Maryland income tax purposes. Income that is

Corporations and organizations that are

taxable for federal purposes is also taxable for

• Qualified Sub-S Subsidiaries are treated as

afforded a later due date for federal returns

Maryland purposes. Exempt corporations with

divisions by the Internal Revenue Code and

under the Internal Revenue Code are afforded

federal taxable income must file Form 500 to

are not considered as separate entities for

the same due date for Maryland income tax

report the income and pay the tax.

Maryland purposes. These divisions will be

returns.

included on the parent company’s annual

Whether or not required to file Form 500,

Signatures Required

Form 500 must be

Maryland return.

nonprofit organizations operating in Maryland

signed by a duly authorized corporate officer.

that are subject to federal exempt-status

• A Real Estate Investment Trust (REIT) is

Preparers, other than corporate employees,

notification requirements must register with the

subject to the Maryland income tax when the

must also sign the return.

Maryland Revenue Administration Division. To

REIT has taxable income at the federal level,

In the case of a return filed by a fiduciary, the

as computed on Federal Form 1120-REIT,

letter of request accompanied by a copy of the

fiduciary must sign the return and attach

that is taxed on the REIT’s federal return. In

verification of the authority to do so.

Internal Revenue Service (IRS) determination of

addition, a Captive REIT may have a

tax-exempt status.

Maryland income tax liability even if that

O R G A N I Z A T I O N S

E X E M P T

F R O M

entity does not have a federal income tax

FILING

The following organizations are not

Other agencies such as the State Executive

liability on its federal return.

subject to the Maryland corporation income tax

Department - Secretary of State, State Depart-

ment of Assessments & Taxation and Attorney

and are exempt from filing an income tax return

A Captive REIT is a corporation, trust, or

General’s Office, each have their own specific

on Form 500, except as specified:

association: that is considered a REIT for the

Instructions For Form 500 - Maryland Corporation Income Tax Return - 2011 Page 3

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