1. A. Net Operating Loss Deduction.

   1. (1) For the loss year, the net operating loss may be used to offset Maryland modifications.
   2. (2) The deductions for carryback and carryover shall be calculated and claimed following federal income tax provisions, and a modification to the amount of the deductions may not be allowed under Maryland income tax law.
   3. (3) When an affiliated group of corporations files a consolidated return for federal purposes, each separate member corporation shall calculate any net operating loss deduction based on its separate federal taxable income and loss and as if the member corporation was not involved in a consolidated filing and filed a separate federal return.
   4. (4) If a corporation elected to relinquish the entire carryback period for federal purposes, a copy of the federal election shall be submitted with the Maryland return for the loss year.
   5. (5) A net operating loss generated when a corporation is not subject to Maryland income tax law may not be allowed as a deduction to offset Maryland income.
   6. (6) If a liquidated or acquired corporation was not subject to Maryland income tax law when its net operating loss was generated, then the acquiring corporation which is subject to Maryland income tax law may not use the net operating loss of the liquidated or acquired corporation as a deduction to offset Maryland income.
2. B. Capital Loss Carryover. A capital loss carryover shall be allowed for Maryland filing. However, a capital loss carryback may not be an allowable deduction under Maryland income tax law.
3. C. Audits. All items reported on the return are subject to audit, verification, and revision. In the event of revision and assessment or reduced refund, the Comptroller shall issue a notice to the corporation.
4. D. Appeals. A taxpayer may appeal an assessment or denial of a refund by applying for a hearing as provided under COMAR 03.01.01.04.

Authority: Tax-General Article, §§2-103 and 10-306.1(h), Annotated Code of Maryland

Effective date: January 9, 1989 (15:27 Md. R. 3126)

Regulation .01 amended effective January 1, 1998 (24:12 Md. R. 861); June 25, 2001 (28:12 Md. R. 1103)

Regulation .01E repealed effective May 2, 2022 (49:9 Md. R. 529)

Regulation .03B amended effective January 1, 1998 (24:12 Md. R. 861); January 14, 1999 (26:1 Md. R. 22); October 9, 2006 (33:20 Md. R. 1612)

Regulation .03C amended effective January 14, 1999 (26:1 Md. R. 22); October 9, 2006 (33:20 Md. R. 1612)

Regulation .04A amended effective March 27, 2017 (44:6 Md. R. 324)

Regulation .04C amended effective October 22, 2007 (34:21 Md. R. 1913); April 19, 2010 (37:8 Md. R. 614)

Regulation .05C amended effective February 9, 2009 (36:3 Md. R. 207)

Regulation .06A amended effective April 19, 2010 (37:8 Md. R. 614)

Regulation .06B, C amended effective August 20, 1990 (17:16 Md. R. 1989)

Regulation .06D amended effective January 14, 1999 (26:1 Md. R. 22)

Regulation .06E amended effective December 22, 2003 (30:25 Md. R. 1844); July 8, 2013 (40:13 Md. R. 1073)

Regulation .07A amended effective October 22, 2007 (34:21 Md. R. 1913)

Regulation .07D amended effective January 14, 1999 (26:1 Md. R. 22)

Regulation .08 amended effective January 1, 1998 (24:26 Md. R. 1754); May 2, 2022 (49:9 Md. R. 529)

Regulation .08B amended effective October 9, 2006 (33:20 Md. R. 1612)

Regulation .08C amended effective October 12, 1992 (19:20 Md. R. 1813); October 9, 2006 (33:20 Md. R. 1612)

Regulation .08D amended effective October 9, 2006 (33:20 Md. R. 1612)

Regulation .08G adopted effective October 9, 2006 (33:20 Md. R. 1612)

Regulation .09 adopted effective April 3, 2000 (27:6 Md. R. 639)

Regulation .09G amended effective May 2, 2022 (49:9 Md. R. 529)

Regulation .10 adopted effective March 4, 2002 (29:4 Md. R. 416)

Regulation .10F amended effective February 9, 2009 (36:3 Md. R. 207)

Regulation .11 adopted effective March 21, 2022 (49:6 Md. R. 404)