Sec. 4. 36 MRSA §5200-A, sub-§2, ¶J, as amended by PL 1999, c. 708, §40, is further amended to read:

J. An amount equal to an income tax refund to the taxpayer by this State or another state of the United States that is included in that taxpayer's federal taxable income for the taxable year under the Code, but only to the extent that:

(1) Maine net income is not reduced below zero; and

(2) The amount to be refunded from this State or another state of the United States has not been previously used as a modification pursuant to this subsection.

If this modification amount results in Maine net income that is less than zero for the taxable year, the negative modification amount may be carried back or forward in the same manner as a net operating loss deduction carry-back or carry-forward to a taxable year that is within the allowable federal period for a carry-back or carry-forward, subject to the above limitations; and

Sec. 5. 36 MRSA §5200-A, sub-§2, ¶K, as enacted by PL 1999, c. 708, §41, is amended to read:

K. Interest or dividends on obligations or securities of this State and its political subdivisions and authorities to the extent included in federal taxable income.; and

Sec. 6. 36 MRSA §5200-A, sub-§2, ¶L is enacted to read:

L.__An amount equal to the taxpayer's donations up to $2,000 to an organization described in Section 501(c)(3) of the Code that is incorporated or based in this State.

Sec. 7. Application. The Maine Revised Statutes, Title 36, section 5122, subsection 2, paragraph O and section 5200-A, subsection 2, paragraph L apply to tax years beginning on or after January 1, 2001.

SUMMARY

This bill proposes an income tax deduction of up to $2,000 for donations to state-based charitable organizations.

This bill also corrects a conflict created by Public Law 1999, chapters 708 and 731, each of which enacted a new Maine Revised Statutes, Title 36, section 5122, subsection 2, paragraph M. This bill resolves the conflict by reallocating one of the new paragraphs to be the Maine Revised Statutes, Title 36, section 5122, subsection 2, paragraph N.