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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 a fraction (as described in §D of this regulation) consisting of the taxpayer's property factor (as described in Regulation .05 of this chapter), payroll factor (as described in Regulation .06 of this chapter), and receipts factor (as described in Regulation .04 of this chapter). C. The apportionment formulas described in §D of this regulation are required only on original returns filed on or after this regulation's effective date. D. Apportionment Formula.
(1) A banking institution operating as a unitary business within and outside the State shall, for tax years beginning before December 31, 2021, use a three-factor formula of property, payroll, and receipts to determine the part of the banking institution's Maryland modified income derived from or reasonably attributable to trade or business carried on in the State, as follows:
(a) For a taxable year beginning before January 1, 2018, the apportionment formula is a fraction, the numerator of which is the sum of the property factor, payroll factor, and twice the receipts factor, and the denominator is four;
(b) For a taxable year beginning after December 31, 2017, but before January 1, 2019, the apportionment formula is a fraction, the numerator of which is the sum of the property factor, the payroll factor and three times the receipts factor, and the denominator of which is five;
(c) For a taxable year beginning after December 31, 2018, but before January 1, 2020, the apportionment formula is a fraction, the numerator of which is the sum of the property factor, the payroll factor, and four times the receipts factor, and the denominator of which is six;
(d) For a taxable year beginning after December 31, 2019, but before January 1, 2021, the apportionment formula is a fraction, the numerator of which is the sum of the property factor, the payroll factor, and five times the receipts factor, and the denominator of which is seven; and
(e) For a taxable year beginning after December 31, 2020, but before January 1, 2022, the apportionment formula is a fraction, the numerator of which is the sum of the property factor, the payroll factor, and six times the receipts factor, and the denominator of which is eight.
(2) A banking institution operating as a unitary business within and outside the State shall, for a taxable year beginning after December 31, 2021, determine the part of the taxpayer's Maryland modified income derived from or reasonably attributable to trade or business carried on in the State by using a single receipts factor apportionment formula, by multiplying its Maryland modified income by 100 percent of the receipts factor. E. 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. F. 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.