An Act To Provide Tax Treatment Consistency for Limited Liability Companies and S Corporations
Maine Legislature, Session 126, LD 0234
Committee: Taxation
Sponsors: WOODBURY, NELSON, HASKELL, HILL, KATZ, BENNETT, CHASE, HOBBINS, KNIGHT, STANLEY
Amends: 36 MRSA §5122, 36 MRSA §5217-A

Legislative Document 
No. 234 
S.P. 70 
In Senate, February 5, 2013 
An Act To Provide Tax Treatment Consistency for Limited Liability 
Companies and S Corporations 
Reference to the Committee on Taxation suggested and ordered printed. 
DAREK M. GRANT 
Secretary of the Senate 
Presented by Senator WOODBURY of Cumberland. 
Cosponsored by Representative NELSON of Falmouth and 
Senators: HASKELL of Cumberland, HILL of York, KATZ of Kennebec, Representatives: 
BENNETT of Kennebunk, CHASE of Wells, HOBBINS of Saco, KNIGHT of Livermore 
Falls, STANLEY of Medway. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  36 MRSA §5122, sub-§1, ¶FF, as amended by PL 2011, c. 644, §14, is 
further amended to read: 
FF.  For taxable years beginning in 2011 and 2012: 
(1)  An amount equal to the depreciation deduction claimed by the taxpayer 
under the Code, Section 168(k) with respect to property placed in service in the 
State during the taxable year for which a credit is claimed under section 
5219-GG; and 
(2)  An amount equal to the net increase in depreciation attributable to the 
depreciation deduction claimed by the taxpayer under the Code, Section 168(k) 
with respect to property for which a credit is not claimed under section 5219-GG; 
and 
Sec. 2.  36 MRSA §5122, sub-§1, ¶GG, as enacted by PL 2011, c. 644, §15 and 
affected by §33, is amended to read: 
GG.  The amount claimed as a deduction in determining federal adjusted gross 
income that is used to calculate the credit for Maine fishery infrastructure investment 
under section 5216-D.; and 
Sec. 3.  36 MRSA §5122, sub-§1, ¶HH is enacted to read: 
HH.  For income tax years beginning on or after January 1, 2014, a resident 
individual's proportional share of the amount of any creditable income tax deducted 
pursuant to Section 703 of the Code by a pass-through entity of which the individual 
is a member when the individual claims the credit allowed by section 5217-A, 
subsection 2, paragraph B with respect to those taxes. 
Sec. 4.  36 MRSA §5217-A, as amended by PL 2003, c. 673, Pt. JJ, §4 and 
affected by §6, is repealed and the following enacted in its place: 
§5217-A.  Income tax paid to other taxing jurisdiction 
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A.  "Creditable income tax" means a tax imposed by another state of the United 
States, a political subdivision of any such state, the District of Columbia or any 
political subdivision of a foreign country that is analogous to a state of the United 
States with respect to income subject to tax under this Part that is derived from 
sources in that taxing jurisdiction.  In determining whether income is derived from 
sources in another jurisdiction, the assessor may not employ the law of the other 
jurisdiction but shall instead assume that a statute equivalent to section 5142 applies 
in that jurisdiction. 
B.  "Member" has the same meaning as in section 5250-B, subsection 1, paragraph A. 
C.  "Pass-through entity" has the same meaning as in section 5250-B, subsection 1, 
paragraph C. 
2.  Credit.  For tax years beginning on or after January 1, 2014, a resident individual 
is allowed a credit against the tax otherwise due under this Part, excluding the tax 
imposed by section 5203-C, for the amount of creditable income tax for the taxable year 
imposed on: 
A.  That individual; or 
B.  A pass-through entity of which the individual is a member to the extent the 
creditable income tax is imposed on that member’s distributive share or pro rata 
share, as the case may be, of the pass-through entity’s income. 
3.  Limitation.  The credit allowed under this section for any of the specified taxing 
jurisdictions may not exceed the proportion of the tax otherwise due under this Part, 
excluding the tax imposed by section 5203-C, that the amount of the taxpayer's Maine 
adjusted gross income derived from sources in that taxing jurisdiction bears to the 
taxpayer's entire Maine adjusted gross income; except that, when a credit is claimed for 
taxes paid to both a state and a political subdivision of a state, the total credit allowable 
for those taxes does not exceed the proportion of the tax otherwise due under this Part, 
excluding the tax imposed by section 5203-C, that the amount of the taxpayer's Maine 
adjusted gross income derived from sources in the other state bears to the taxpayer's 
entire Maine adjusted gross income. 
Sec. 5.  Application.  This Act applies to tax years beginning on or after January 1, 
2014. 
SUMMARY 
This bill allows a member of a pass-through entity, such as a limited liability 
company or S corporation, to receive an income tax credit against taxes imposed on that 
member’s distributive share or pro rata share of the pass-through entity’s income, and 
ensures that the amount used to calculate the income tax credit for certain members of 
pass-through entities cannot also be used as a deduction from income.  This bill applies to 
tax years beginning on or after January 1, 2014.