C. Proceeds from any Maine State Lottery or Tri-state Lotto tickets purchased in this State, including payments received from a 3rd party for the transfer of the rights to future proceeds related to any such tickets.

Sec. LLLL-2. 36 MRSA §5142, sub-§2, as enacted by P&SL 1969, c. 154, §F, is amended to read:

2. Attribution. Items of income, gain, loss, and deduction derived from or connected with sources within this State are those items attributable to:

A. The ownership or disposition of any interest in real or tangible personal property in this State; and

B. A business, trade, profession or occupation carried on in this State.; and

C.__Proceeds from any gambling activity conducted in this State or lottery tickets purchased in this State, including payments received by a 3rd party for the transfer of the rights to future proceeds related to any gambling activity or lottery tickets.

PART MMMM

Sec. MMMM-1. 36 MRSA §5142, sub-§3-A is enacted to read:

3-A.__Gain or loss on sale of partnership interest.__ Notwithstanding subsection 3, the gain or loss on the sale of a partnership interest is sourced to this State in an amount equal to the gain or loss multiplied by the ratio obtained by dividing the original cost of partnership tangible property located in Maine by the original cost of partnership tangible property everywhere, determined at the time of the sale.__Tangible property includes property owned or rented and is valued in accordance with section 5211, subsection 10.__If more than 50% of the value of the partnership's assets consist of intangible property, gain or loss from the sale of the partnership interest is sourced to this State in accordance with the sales factor of the partnership for its first full tax period immediately preceding the tax period of the partnership during which the partnership interest was sold.__For purposes of this subsection, the sales factor of a partnership is determined in accordance with section 5211, subsections 14, 15 and 16.__This subsection

does not apply to the sale of a limited partner's interest in an investment partnership where more than 80% of the value of the partnership's total assets consists of intangible personal property held for investment, except that such property cannot include an interest in a partnership unless that partnership is itself an investment partnership.

If the apportionment provisions of this section do not fairly represent the extent of the partnership's business activity in this State, the taxpayer may petition for, or the State Tax Assessor may require, in respect to all or any part of the partnership's business activity the employment of any other method to effectuate an equitable apportionment to this State of the partner's income from the sale of the partnership interest.

Sec. MMMM-2. 36 MRSA §5211, sub-§16, as enacted by P&SL 1969, c. 154, §F, is amended to read:

16. When sales other than tangible personal property are in State. Sales, other than sales of tangible personal property, are in this State if:

A. The income-producing activity is performed in this State; or

B. The income-producing activity is performed both in and outside this State and a greater proportion of the income- producing activity is performed in this State than in any other state, based on costs of performance.; or

C.__The sales are sales of a partnership interest sourced to Maine in accordance with section 5142, subsection 3-A.

Sec. MMMM-3. Application. This Part applies to gains or losses from the sale of partnerships on or after July 1, 2005.

PART NNNN

Sec. NNNN-1. 36 MRSA §185, as enacted by PL 1981, c. 364, §13, is repealed and the following enacted in its place:

§185.__Set-off

1.__Obligation owed to taxpayer.__The State or a department, agency or official acting in an official capacity may assign to the State Tax Assessor, in payment of any liquidated tax liability of a taxpayer under this Title, an obligation owed to that taxpayer by the State or that department, agency or official.