§ 12-6-1120 — Gross income; computation; modifications.

South Carolina § 12-6-1120

• Jurisdiction: South Carolina
• Title 12: TAXATION
• Ch. 6: SOUTH CAROLINA INCOME TAX ACT

Text

South Carolina gross income is computed by making modifications to gross income provided in the Internal Revenue Code as follows: (1) The exclusion from gross income authorized by Internal Revenue Code Section 103 (Interest on State and Local Bonds) is modified to exempt only interest on obligations of this State or any of its political subdivisions, and to exempt interest upon obligations of the United States. This modification applies to all Internal Revenue Code Sections referencing Section 103. (2) South Carolina gross income does not include any state income tax refund included in federal gross income. (3) Reserved. (4) South Carolina gross income is determined without application of Internal Revenue Code Sections 78 (Gross-up of Dividends received from Certain Foreign Corporations), 86 (Social Security and Tier 1 Railroad Retirement Benefits), and 87 (Alcohol Fuel Credit). (5) The exclusions permitted by Internal Revenue Code Sections 912 (Exemptions for Certain Allowances for Citizens or Residents of the United States Living Abroad) and 931 through 936 (Income from Possessions of the United States) are not permitted. (6) A beneficiary of a trust shall exclude from South Carolina taxable income any excess distributions by trusts included in the beneficiary's federal taxable income by reason of Internal Revenue Code Sections 665 through 669 (Treatment of Excess Distributions by Trusts) or any comparable provisions. (7) South Carolina gross income does not include compensation or retirement benefits received from the United States or any state for service in a state National Guard or a reserve component of the Armed Forces of the United States. This exclusion only applies to compensation and retirement benefits received for the customary annual training period not to exceed fifteen days for guard members or fourteen days plus travel time for reserve members, weekend drills, and inactive duty training. National Guard or reserve members that are called to active duty are allowed to deduct fifteen days of active duty pay if they have not excluded pay for the annual training period for the same taxable year. (8) Each partner in the Palmetto Seed Capital Fund Limited Partnership (Fund) established pursuant to Section 41-44-60 shall exclude from South Carolina gross income seventy-five percent of the partner's proportionate share of income the fund derives from a South Carolina business which is either: (i) established and operated in a least developed county as defined in Section 12-6-3360; or (ii) invested in agriculture, aquaculture, or a related business or in a business created by a socially or economically disadvantaged individual as defined in 13 Code of Federal Regulations, Sections 124.105(A) and 124.106 (1987). (9) Notwithstanding Section 12 of Act 101 of 1985, Internal Revenue Code Section 7518 applies retroactively to taxable years beginning after 1986 and applies to any taxpayer. (10) South Carolina gross income does not include the amounts excluded by Section 59-4-100 of the South Carolina Tuition Prepayment Program. (11) For taxable years beginning on or after January 1, 2023, and prior to January 1, 2029, there shall be subtracted from taxable income any grant or subgrant pursuant to the Broadband Equity, Access, and Deployment Program established pursuant to 47 U.S.C. 1702, or the American Rescue Plan Act of 2021, Public Law 117-2, received for the purpose of making investments in broadband infrastructure but only to the extent that such grant or subgrant is included in the corporation's taxable income, as defined under the Internal Revenue Code of 1986.

Legislative History

HISTORY: 1995 Act No. 76, SECTION 1; 1997 Act No. 155, Part II, SECTION 5; 1999 Act No. 114, SECTION 3; 2000 Act No. 399, SECTION 4(A), eff August 17, 2000; 2024 Act No. 222 (H.4087), SECTION 5, eff July 2, 2024. Editor's Note 2024 Act No. 222, SECTION 6, provides as follows: "SECTION 6. This act takes effect upon approval by the Governor and first applies to income tax years beginning after 2023, except that SECTION 3 first applies to income tax years beginning after 2020." Effect of Amendment 2024 Act No. 222, SECTION 5, added (11).