Maryland State Comptroller of the Treasury v. Wynne

McDonald, j.

Federal and Maryland law allow for the attribution of corporate income to the corporation’s shareholders — without being taxed at the corporate level — in defined circumstances. In particular, the income of a Subchapter S corporation is deemed to “pass through” to the shareholders who are then directly taxed on that income. Some or all of that income may be generated outside the state in which a shareholder resides.

The Maryland income tax law reaches all of the income of a Maryland resident. The State income tax law allows a credit against an individual’s State tax liability for…