Economic Impact Zone Credit Entry
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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 - 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.
- 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.
- 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.
- 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.
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