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E. Calculating the capital investment credit

Under Section 12-14-60(A)(2), the amount of the credit is equal to the aggregate of:

• 3-year Property – 0.5% of total aggregate bases for all 3-year property that qualifies;

• 5-year Property – 1% of total aggregate bases for all 5-year property that qualifies;

• 7-year Property – 1.5% of total aggregate bases for all 7-year property that qualifies;

• 10-year Property – 2% of total aggregate bases for all 10-year property that qualifies;

•

15-year or more Property – 2.5% of total aggregate bases for all 15-year or more property that qualifies (See

definitions.).

Whether property is 3-year property, 5-year property, 7-year property, 10-year property or 15-year property is determined

based on the applicable recovery period for such property under Internal Revenue Code Section 168(e).

F. Required basis adjustments

Under Section 12-14-80(H)(1), 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.

G. Leased property

Section 12-14-80(H)(2) provides, notwithstanding Section 12-14-80(H)(1), that if the taxpayer is the lessee of the qualified

manufacturing and productive equipment property for which credit has been taken by the taxpayer, in lieu of any

adjustment to the basis of such property, the taxpayer shall include in its taxable income for South Carolina income tax

purposes, an amount equal to the amount of the credit that is earned during such tax year.

II. Applying credits against income and withholding tax returns

After claiming the new jobs credit (TC-4) and the capital investment credit against income tax, Section 12-14-80(D)

provides that a qualifying taxpayer may apply unused amounts of these credits against withholding tax.

A. Income tax return

Capital investment credits and new jobs credits must first be used against income tax. Excess amounts may be carried

forward for use against withholding tax for the following tax year. Pursuant to Code Section 12-6-3360(A), new jobs credits

are limited to 50% of your income tax liability before the application of other credits.

Section 12-14-80(E) provides that capital investment tax credits carried forward for less than 10 years may not reduce a

taxpayer’s income tax liability by more than 50%. Credits carried forward beyond 10 years may not reduce a taxpayer's

income tax liability by more than 25%.

B. Withholding tax returns

After claiming the capital investment credit and the new jobs credit against income tax, excess amounts may be claimed

against withholding tax for the following tax year. Code Section 12-14-80(D) provides that credits claimed against

withholding tax may not exceed 50% of the withholding tax shown as due on the return. Use the Schedule at the end of

this form before the application of other credits. Capital investment credit carryforwards that existed on June 18, 2012 (the

effective date of 2012 Act No. 187) may not be used to reduce withholding tax liabilities. After claiming the capital

investment credit and the new jobs credit against withholding tax, excess amounts may be claimed against income tax for

the same tax year.

C. Credits carried forward

Under Section 12-6-3360(H), new jobs credits can be carried forward for 15 years from the tax year in which the credit is

earned. Under Code Section 12-14-80(D), capital investment credits may be carried forward indefinitely. Complete and

attach the Table at the end of the instructions to each return involving credit carryovers.

36682011

Form Sch-Tc-11a - New Jobs And Capital Investment Credits For Plastics And Rubber Manufacturers Page 9