§ 11-44-65 — Tax treatment of capital gain or loss on sale or exchange of credit assets.

South Carolina § 11-44-65

• Jurisdiction: South Carolina
• Title 11: PUBLIC FINANCE
• Ch. 44: HIGH GROWTH SMALL BUSINESS JOB CREATION ACT

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(A) For purposes of this section: (1) "Angel investor taxpayer" means a taxpayer who invested in a capital asset and as a result of that investment was eligible to claim the tax credit allowed pursuant to this chapter. (2) "Credit asset" means a capital asset acquired by an angel investor taxpayer who was eligible to claim the tax credit allowed pursuant to this chapter with respect to the acquisition. (3) "Net capital gain" is as defined in Internal Revenue Code Section 1222 and related sections. (4) "Net capital loss" is as defined in Internal Revenue Code Section 1211(b), not including the limitation imposed pursuant to Section 1211(b)(1). (B)(1) If an angel investor taxpayer recognized net capital gain on the sale or exchange of credit assets in a taxable year, then the amount of net capital gain of that taxpayer eligible for the deduction otherwise allowed pursuant to Section 12-6-1150 must be reduced by the net capital gain on the sale or exchange of credit assets by the angel investor taxpayer. (2) In a separate computation in each taxable year the angel investor taxpayer shall attribute the net capital gain on credit assets to each credit asset in the ratio that the long term capital gain on each separate credit asset as a proportion of all such long term gain bears to the net capital gain reduction required pursuant to item (1). If cumulative net capital gain on a credit asset multiplied by seven percent equals the total credit claimed on the credit asset, the excess of the net capital gain attributable to this credit asset over that necessary to produce the total credit amount in the computation is deducted from the reduction otherwise required pursuant to item (1). (C)(1) If an angel investor taxpayer recognized net capital loss on the sale or exchange of credit assets in a taxable year in an amount equal to or less than the total of tax credits claimed on those credit assets, then there is added to the angel investor taxpayer's South Carolina taxable income for that taxable year the amount of the net capital loss on those credit assets not to exceed the tax credits claimed on those credit assets. (2) If an angel investor taxpayer recognized net capital loss on the sale or exchange of credit assets in a taxable year in an amount greater than the amount of the tax credits claimed on those credit assets, then there is added to the angel investor taxpayer's South Carolina taxable income for that taxable year the amount of the tax credit claimed on those credit assets.

Legislative History

HISTORY: 2013 Act No. 80, SECTION 1.A, eff June 14, 2013; 2020 Act No. 138 (S.76), SECTION 3.B., eff May 26, 2020. Editor's Note 2013 Act No. 80, SECTION 1.B., as amended by 2020 Act No. 138, SECTION 3.A., and SECTION 3, provide as follows: "[1.]B. The provisions of Chapter 44, Title 11, contained in this act are repealed on December 31, 2025. Any carry forward credits shall continue to be allowed until the ten-year time period in Section 11-44-40(B) is completed." "SECTION 3. This act takes effect upon approval by the Governor, and the tax credits permitted by this chapter are first available for investments made after December 31, 2012." 2020 Act No. 138, SECTION 3.B., provides as follows: "[3.]B. This SECTION takes effect upon approval by the Governor and applies to tax years beginning after 2019. The provisions of Chapter 44, Title 11, as they existed on December 31, 2019, are re-enacted, and the tax credits earned pursuant to this SECTION shall be earned and claimed under the same terms and conditions as they existed on December 31, 2019. This SECTION shall continue to apply until such time as Chapter 44, Title 11, or parts thereof, are otherwise repealed, mutatis mutandis."