Form Sc 1104 - Savings And Loan Association Tax Return (Page 4 of 4) in pdf

Page 2

(C)

If a taxpayer's method of accounting is changed any additional income or reduction which results from adjustments

determined to be necessary solely by reason of the change must be included in income or deducted from income as

provided in the Internal Revenue Code. If a corporation has different SC and federal amounts of an item or prepaid

income or deferred expense or other similar balance sheet item as of January 1, 1985, the taxpayer is entitled, at

his option, to make an application to the SC Department of Revenue for a change in accounting method and shall

include in the change of accounting method all items in paragraph (1) of this subsection whether resulting in an

increase or decrease in the transitional adjustment.

(1) items subject to adjustment are only those which:

(a) Have been treated differently in determining amounts subject to tax under SC and federal income tax laws

which were applicable in the period prior to January 1, 1985;

(b) Have been an element in determining SC income subject to tax in periods with respect to which SC income tax

was paid;

adjustment to income subject to tax on account of the differences in federal and SC tax reporting.

(2) Items subject to adjustment may consist of deductions taken or not taken in prior years, or amounts of income

required to be included or excluded in such years, but the items must be disregarded to the extent it can be shown

that the prior treatment of the items had no actual effect on the amount of SC income tax paid. In making the

showing, no items other than the items subject to this transitional adjustment may be considered.

(3) The net income reportable or net deduction allowable under the subsection must be reported or deducted in equal

amounts of one tenth each over the first ten taxable periods ending after the approval of a change of accounting

methods, except that if the net income or deduction is less than twenty-five thousand dollars:

(a) The income is reportable in full in the first taxable period ending after the approval of the change; or the income

is deductible in the first taxable period after the approval of the change to the extent of the taxpayer's taxable

income and to each taxable period thereafter to the extent not previously taken in the earliest successive

taxable period.

Some of the Deductions from Federal Net Income are:

(A)

Associations are exempt from the tax during the first three years of their operation.

(B)

Reduction in basis of depreciable property as required by Section 48(q) of the Internal Revenue Code.

(C)

If, as of January 1, 1985, a taxpayer is deducting the cost of personal property placed in service prior to 1985, as

provided in Internal Revenue Code Section 168, the taxpayer is allowed, for SC purposes, a similar annual

deduction. At the expiration of the deductions, for federal tax purposes, the balance of the deductible cost has been

deducted, for SC income tax purposes, at the rate of fifty percent a year, until the entire deductible cost has been

deducted. In no event may the deduction authorized by this subsection exceed the depreciable basis of the assets.

(D)

If, as of January 1, 1985, a taxpayer is deducting the cost of improvements to real property paid or incurred prior

to 1985 the balance of the deductible cost may be deducted, for SC income tax purposes, at the rate of twenty

percent a year, until the entire deductible cost of the improvements has been deducted. In no event may the

deduction authorized by this section exceed the depreciable basis of the assets.

LINE 4 - Total SC Net Income

Must be completed by all taxpayers.

LINE 5 - SC Net Operating Loss Carryover

After adding the federal NOL to federal taxable income in Schedule A, the South Carolina NOL is subtracted on Line 5.

LINE 8 - Nonrefundable Credits

Attach SC1120-TC and applicable tax credit schedules. The credits claimed cannot exceed your tax liability.

LINE 13 - Penalty For Underpayment Of Estimated Tax

If the association underpaid it's estimated tax, complete SC2220 and attach it to the return. If the association owes a

penalty, show the amount in the space provided. If the association is due a refund, subtract the penalty amount from the

overpayment shown on line 15. SC2220 is available upon request or visit our website:

For additional information refer to SC1120 instructions.

35522010

Form Sc 1104 - Savings And Loan Association Tax Return Page 4

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