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South Carolina Economic Impact Zone Credit

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South Carolina Economic Impact Zone Credit

Answer

Effective for qualifying investments made after June 30, 1998, the amount of the credit is equal to the aggregate of:

  • Three-Year Property - One percent of total aggregate bases for all three-year property that qualifies.
  • Five-Year Property - Two percent of total aggregate bases for all five-year property that qualifies.
  • Seven-Year Property - Three percent of total aggregate bases for all seven-year property that qualifies.
  • Ten-Year Property - Four percent of total aggregate bases for all ten-year property that qualifies.
  • Fifteen-Year Property or Greater - Five percent of total aggregate bases for all fifteen-year or greater property that qualifies.

Also effective for qualifying investments made after June 30, 1998, the basis of the qualifying property must be reduced by the amount of the credit claimed with respect to the property. The corresponding decrease in the depreciation deduction will result in an addition to federal taxable income for South Carolina income tax purposes.

Effective for qualifying investments made after June 30, 1998, the amount of the credit is limited to no more than five million dollars for any entity subject to the license tax provided in Section 12-20-100 (Form SC1120U filers). Note: the credit offsets income tax, not license tax.

General Information 

  1. For tax years beginning after 1996, any unused credit allowed pursuant to this section may be carried forward for ten years from the close of the tax year in which the credit was earned.
  2. For any qualifying investments made after June 30, 1998, if during any taxable year and before the end of applicable recovery period for such property as determined under Section 168(c) of the Internal Revenue Code, the taxpayer disposes of or removes from the economic impact zone, economic impact qualified manufacturing and productive equipment property, then the income tax due under Chapter 6 by the taxpayer for the current taxable year must be increased by the full amount of any credit claimed in prior years with respect to such property. See SC SCH TC-11-R.
  3. For South Carolina income tax purposes, the basis of the economic impact zone qualified manufacturing and productive equipment property must be reduced by the amount of any credit claimed with respect to the property. For any qualifying investments made after June 30, 1998, if a taxpayer is required to recapture the economic impact zone investment tax credit, the taxpayer may increase the basis of the property by the amount of any basis reduction attributable with claiming the economic impact zone investment tax credit in prior years. The basis must be increased in the year in which the credit is recaptured.
  4. The credit allowed by this section for investments made after June 30, 1998 is limited to no more than five million dollars for any entity subject to the license tax as provided in Section 12-20-100.

Effective June 1, 2005, this section applies for credits earned in taxable years beginning after 1996.

If a taxpayer (1) has made a total capital investment of not less than $50,000,000 in South Carolina in the previous 5 years, (2) is engaged in an activity or activities in South Carolina listed under Section 31, 32 or 33 of the North American Industry Classification System (NAICS) Manual, and (3) either (a) employs 1,000 or more full-time workers in South Carolina while having a total capital investment here of at least $500,000,000 or (b) employs 850 or more full-time workers in South Carolina while having a total capital investment here of not less than $750,000,000, any credit unused within the initial 10 year period can be carried forward for use in any subsequent tax years. Credits carried forward beyond the initial 10 year period may not reduce a taxpayer's state income tax liability in any tax year by more than 25%.

Social Security Privacy Act Disclosure
It is mandatory that you provide your social security number on this tax form if you are an individual taking this credit. 42 U.S.C 405(c)(2)(C)(i) permits a state to use an individual's social security number as means of identification in administration of any tax. SC Regulation 117-201 mandates that any person required to make a return to the SC Department of Revenue shall provide identifying numbers, as prescribed, for securing proper identification. Your social security number is used for identification purposes.

The Family Privacy Protection Act
Under the Family Privacy Protection Act, the collection of personal information from citizens by the Department of Revenue is limited to the information necessary for the Department to fulfill its statutory duties. In most instances, once this information is collected by the Department, it is protected by law from public disclosure. In those situations where public disclosure is not prohibited, the Family Privacy Protection Act prevents such information from being used by third parties for commercial solicitation purposes.


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Views: 196 Created on: Jun 15, 2013
Date updated: Aug 10, 2015

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