Instructions For Form 500 - Maryland Corporation Income Tax Return

taxable year under IRC Section 856; that is

loss and special deductions for dividends. (See

front cover of tax booklet to request forms.)

not regularly traded on an established

“Specific Instructions” for line 1.) No modification

Tax, Interest and Penalty The corporation

securities market; and more than 50% of the

of the federal net operating loss or special

tax rate is 7% of Maryland taxable income for

voting power or value of the beneficial

deductions is allowed under Maryland income

tax years and periods beginning in 1967 through

interests or shares of which, at any time

tax law except in the case of a foreign source

2007. For tax years beginning after 12/31/07,

during the last half of the taxable year, are

dividend subtraction carryforward. For more

the tax rate is 8.25%.

The annual rate of

owned or controlled (directly or indirectly) by

information see Administrative Release 18.

interest charged for taxes owed to the State is

a single entity that is a C corporation. Refer

The federal net operating loss deduction is

13%.

to Maryland Tax-General Article Section

effectively allowed for the Maryland filing by

A penalty is applicable for late filing of tax

10-306.1(a)(2) for certain exceptions. A

using federal taxable income. The federal

returns and/or late payment of any taxes due.

Captive REIT is required to report a Maryland

provisions for carryback and carryover also

Additional penalties are applicable for the filing

addition modification for the amount of its

apply for purposes of the Maryland return unless

of false, fraudulent or frivolous returns and civil

federal dividends paid deduction.

you are following certain provisions of the Job

and/or criminal fines and imprisonment may

• Manufacturing Corporations are subject to

Creation and Worker Assistance Act of 2002

apply.

a special single factor formula of receipts.

and the American Recovery and Reinvestment

In the case of delinquent taxes, the State will

The rules for calculating the single factor can

Act of 2009. The State of Maryland decoupled

record a lien and judgment and proceed with

be found in Maryland Regulation 03.04.03.10.

from the 5-year carryback provisions. If an

legal action as necessary to effect collection of

election to forgo a carryback is made, a copy of

In addition, manufacturing corporations with

the balance due.

the federal election must have been included

more than 25 employees should complete

with the Maryland return for the loss year. For

Form 500MC if apportionment is used. All

more information refer to Administrative Release

OTHER MATTERS

three (3) factors must be completed on page

38.

2 of Form 500 for the purpose of completing

Extension of Time to File

If unable to file

For the tax year in which a net operating loss

Form 500MC.

Form 500 by the due date, a corporation must

occurs, that current operating loss is used to

submit Form 500E - Maryland Application for

GENERAL INFORMATION FOR

offset Maryland modifications. If the total of

Extension to File Corporation Income Tax

FORM 500

addition modifications exceeds the total

Return. Maryland law provides for an extension

subtraction modifications in the tax year of the

of time to file, but in no case can an extension

Accounting Periods The tax year or period

net operating loss, a modification to recapture

be granted for more than seven months beyond

used for the federal return must be used for the

the excess of additions over subtractions is

the original due date.

Maryland return. Accordingly, calendar tax

required when claiming the corresponding net

years, fiscal tax years, 52-53 week tax years,

operating loss deduction. See Specific

The request for extension of time to file will be

and short tax periods may be necessary for

Instructions for additional information.

granted for seven months, provided that:

Maryland filing purposes.

The federal special deduction for dividends

1) the application is properly filed and submitted

A Maryland return must be filed for each

is treated as a current year deduction. It is

by the 15th day of the 3rd month following

reporting period for which a federal return is

deducted from federal taxable income before

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

filed or required. The form used for filing must

application of the net operating loss deduction.

original due date required for filing of the

reflect the preprinted tax year in which the

The deduction reduces taxable income and may

federal return; and

corporation’s tax year begins.

create a net operating loss.

2) full payment of any balance due is submitted

In the case of a 52-53 week tax year,

In the case of an affiliated group of

with the application.

Maryland follows federal treatment as to effec -

corporations filing a consolidated return for

The application extends only the time allowed

tive dates or the applicability of any provision

federal purposes, each member corporation

to file the annual income tax return and not the

expressed in terms of tax years beginning,

must calculate any net operating loss and

time allowed to pay the tax.

including or ending with reference to a specified

special deductions based on its separate federal

date.

taxable income and loss. The deductions must

For additional information regarding

extensions of time to file, see the instructions

be calculated in strict accordance with federal

Use of Federal Figures

In preparing Form

provided with Form 500E.

income tax provisions, as if the member

500, all items that are reported for federal

corporation is not involved in a consolidated

purposes must be reported on the Maryland

Estimated Income Tax Every corporation that

filing and files a separate return with the IRS.

return in the same manner. The character of an

reasonably expects its Maryland taxable income

item cannot be changed from that required or

to develop a tax in excess of $1,000 for the tax

Maryland modified income is federal taxable

elected for federal purposes.

year or period must make estimated income tax

income after statutory addition and subtraction

payments with Form 500D - Maryland

modifications. For a listing of the statutory

Copy of Federal Return Required A copy of

Declaration of Estimated Corporation Income

addition and subtraction modifications, see

the actual federal income tax return through

Tax. If the corporation is required to make

Specific Instructions.

Schedule M2 as filed with the IRS for the

multiple payments it will use a Form 500D for

corresponding tax period must be attached to

Maryland apportioned income is applicable

each of the additional payments. This form is

Form 500. The Maryland filing will not be

only for multistate corporations and is developed

available at our Web site. The Comptroller of

complete unless the required federal copy is

by applying the apportionment factor to

Maryland has discontinued the use of Form

attached.

Maryland modified income. For an explanation

500DP.

of apportionment provisions, see Instructions for

Corporations included in a consolidated filing

Declaration of estimated income tax payments

Schedule A – Computation of Apportionment

for federal income tax purposes must file

are due by the 15th day of the 4th, 6th, 9th and

Factor.

separate returns for Maryland purposes and

12th months following the beginning of the tax

attach a copy of the actual consolidated federal

Maryland taxable income is federal taxable

year or period. The total estimated tax payments

return through Schedule M2 to each Maryland

income after statutory modifications and

for the year must be at least 90% of the tax

filing. Each Maryland filing must also include a

applicable apportionment.

developed for the current tax year or 110% of

copy of the columnar schedules of income and

M a r y l a n d B u s i n e s s I n c o m e T a x

the tax that was developed for the prior tax

expense and of balance sheet items (which are

Credits For information about credits against

year. At least 25% of the total estimated tax

required for the federal filing), reconciling the

the tax see Specific Instructions for lines 10c

must be remitted by each of the four installment

separate items of each member corporation to

and 10d or the instructions provided for Form

due dates.

the consolidated totals.

500CR-Maryland Business Income Tax Credits.

In the case of a short tax period the total

Taxable Income The starting point for Form

Form 500CR is available from the Maryland

estimated tax required is the same as for a

500 is the taxable income as developed for the

Revenue Administration Divi sion. (See inside

regular tax year: 90% of the tax developed for

federal income tax return after net operating

Instructions For Form 500 - Maryland Corporation Income Tax Return - 2011 Page 4

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