| Be it enacted by the People of the State of Maine as follows: |
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| | Sec. 1. 36 MRSA §5122, sub-§2, ¶J, as corrected by RR 1997, c. 2, §59, | is amended to read: |
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| J. Any amount constituting a qualified withdrawal from an | account established pursuant to Title 20-A, chapter 417-E | and used for paying higher education expenses; and |
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| | Sec. 2. 36 MRSA §5122, sub-§2, ¶K, as reallocated by RR 1997, c. 2, §60 | and affected by §61, is amended to read: |
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| K. For income tax years beginning on or after January 1, | 1997, all items of income, gain, interest, dividends, | royalties and other income of a financial institution | subject to the tax imposed by section 5206, to the extent | that those items are passed through to the taxpayer for | federal income tax purposes, including, if the financial | institution is an S corporation, the taxpayer's pro rata | share and, if the financial institution is a partnership or | limited liability company, the taxpayer's distributive | share. A subtraction may not be made under this paragraph | for: |
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| (1) Income of the taxpayer earned on interest-bearing | or similar accounts of the taxpayer at a financial | institution as a customer of that financial | institution; |
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| (2) Any dividends or other distributions with respect | to a taxpayer's ownership interest in a financial | institution; and |
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| (3) Any gain recognized on the disposition by the | taxpayer of an ownership interest in a financial | institution.; and |
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| | Sec. 3. 36 MRSA §5122, sub-§2, ¶L is enacted to read: |
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| L.__An amount equal to any income derived from a capital | gain. |
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| | Sec. 4. 36 MRSA §5200-A, sub-§2, ¶H, as amended by PL 1997, c. 746, §11 | and affected by §24, is further amended to read: |
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| H. For each taxable year subsequent to the year of the | loss, an amount equal to the absolute value of the net | operating loss arising from tax years beginning on or after | January 1, 1989 but before January 1, 1993 and that, | pursuant to the Code, Section 172, was carried back for | federal income tax purposes, but only to the extent that: |
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