An Act To
Maine Legislature, Session 123, LD 1400
Committee Amendment CA_B_S460 (Senate)
Amends: 36 MRSA §5192

Majority 
COMMITTEE AMENDMENT" f:)" to S.P. 488, L.D. 1400, Bill, "An Act To 
Amend the Laws Governing the Taxation of Partnerships" 
I I 
Amend the bill by striking out section I and inserting the following: 
'Sec. 1. 36 MRS A §S142, suh-§6, as amended by PL 1987, c. 841, §3, is further 
amended to read: 
6. Apportionment. If a business, trade, profession or occupation is carried on partly 
IS 
within and partly without this State, the items of income and deduction derived from or 
connected with sources within this State sfla.ll must be determined as apportioned to this 
State under chapter 821 or in the case of the rendering of purely personal services by an 
individual under regulations rules to be prescribed by the assessor. The individual's 
distributive share of partnership income apportioned to this State in accordance with this 
subsection must be reduced by the partner's reasonable compensation for personal 
services actually devoted to the practice of law or accountancy multiplied by the 
apportionment factor of the partnership, but the reduction applies only if: 
A. The partnership is primarily engaged in the practice of law or accountancy; 
B. The partner is a nonresident partner; 
C. The nonresident partner is not present in this State performing personal services 
on behalf of the partnership for more than 10 days during the taxable year; and 
D. The nonresident partner is a resident of a state that does not impose a personal 
income tax on compensation from employment or from the performance of personal 
services. 
For the purposes of this subsection, reasonable compensation is determined in the same 
manner as it is for purposes of the Code, Section 162(a)(1) and related regulations. 
Sec. 2. 36 MRSA §Sl92, suh-§2, as amended by PL 1985, c. 783, §32, is further 
amended to read: 
COMMITTEE AMENDMENT 
.. ' 
,.f, ,', 
COMMITTEE AMENDMENT'~ .. to S.P. 488, L.D. 1400 
2. Itemized deductions. If a nonresident partner of any partnership elects to itemize 
fl.i.s deductions in determining fl.i.s the partner's tax liability to this State, there sMlt must 
be attributed to him his the partner that partner's distributive share of partnership items of 
deduction from federal adjusted gross income, reduced by an amount equal to the 
partner's distributive share of those items of deduction multiplied by a fraction, the 
numerator of which is the partner's reasonable compensation used in determining items of 
income and deduction for purposes of section 5142, subsection 6 and the denominator of 
which is the distributive share of the partner's partnership income included in federal 
adjusted gross income. 
Sec. 3. 36 MRSA §5192, sub-§4, as amended by PL 1979, c. 541, Pt. A, §234, is 
further amended to read: 
4. Partner's modifications. Any modification described in section 5122, subsection 
subsections 1 and 2, which that relates to an item of partnership income, gain, loss or 
deduction,.-s-hal-l must be made in accordance with the partner's distributive share, for 
federal income tax purposes of the item to which the modification relates, but limited to 
the portion of such item derived from or connected with sources in this State. The 
partner's modification determined in accordance with this subsection must be reduced by 
an amount equal to the partner's modification amount multiplied by a fraction, the 
numerator of which is the partner's reasonable compensation used in determining items of 
income and deduction for purposes of section 5142, subsection 6 and the denominator of 
which is the distributive share of the partner's partnership income included in federal 
adjusted gross income. 
Sec. 4. Application. This Act applies to tax years beginning on or after January 1, 
2008. 
Sec. 5. Appropriations and allocations. The following appropriations and 
allocations are made. 
ADMINISTRATIVE AND FINANCIAL SERVICES, DEPARTMENT OF 
Revenue Services - Bureau of 0002 
Initiative: Provides funds for the one-time administrative costs associated with the change 
in the apportionment of certain partnership income related to the practice of law or 
accountancy. 
GENERAL FUND 
All Other 
GENERAL FUND TOTAL 
2007-08 
$0 
$0 
2008-09 
$33,300 
$33,300 
Amend the bill by relettering or renumbering any nonconsecutive Part letter or 
section number to read consecutively. 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT" B " 
to S.P. 488, L.D. 1400 
'~ .' 
~I·~ < 
SUMMARY 
This amendment limits the scope of the bill to partnership income related to the 
practice of law or accountancy. It provides additional clarification regarding the 
calculation of income by specifying the method for determining reasonable 
compensation. It also adds an appropriations and allocations section. 
FISCAL NOTE REQUIRED 
(See attached) 
COMMITTEE AMENDMENT 
Approved: 01130108 Mac.. 
LD 1400 
LR 2113(04) 
An Act To Amend the Laws Governing the Taxation of Partnerships 
Fiscal Note for Bill as Amended by Committee Amendment" 8 " 
Committee: Taxation 
Net Cost (Savings) 
General Fund 
Appropriations/Allocations 
General Fund 
Revenue 
General Fund 
Other Special Revenue Funds 
Fiscal Detail and Notes 
Fiscal Note Required: Yes 
Fiscal Note 
2007-08 
$0 
$0 
$0 
$0 
2008-09 
$1,042,960 
$33,300 
($1,009,660) 
($54,260) 
Projections 
2009-10 
$779,784 
$0 
($779,784) 
($42,773) 
Projections 
2010-11 
$810,975 
$0 
($810,975) 
($44,484) 
Changing the taxation of the paIinership income of certain nonresidents will decrease General Fund Revenue by 
$1,009,660 in fiscal year 2008-09. This bill also includes a one-time General Fund appropriation of $33,300 in fiscal 
year 2008-09 for Maine Revenue Services' administrative computer programming costs. 
LR2113(04) - Fiscal Note - Page I of I