Form Sc Sch.tc 11 - Capital Investment Credit (Page 2 of 2) in pdf

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 Section 168(e) of the Internal Revenue Code (IRC).

Qualified property

"Qualified manufacturing and productive equipment property" means any property:

(a) which is used as an integral part of manufacturing or production, or used as an integral part of extraction of or furnishing

transportation, communications, electrical energy, gas, water, or sewage disposal services in the economic impact zone;

(b) which is tangible property to which IRC Section 168 applies;

(d)(i) the construction, reconstruction, or erection of which is completed by the taxpayer in this State; or

(ii) which is acquired by the taxpayer if the original use of such property commences with the taxpayer inside this State.

In the case of any computer software which is used to control or monitor a manufacturing or production process inside this State

and with respect to which depreciation (or amortization in lieu of depreciation) is allowable, the software must be treated as

qualified manufacturing and productive equipment property.

This credit does not apply to any property to which the other tax credits would apply unless the taxpayer elects to waive the

application of the other credits to the property.

Credit carryover

Unused credit allowed pursuant to this section may be carried forward for 10 years from the close of the tax year in which the

credit was earned.

In the case of credit unused within the initial 10-year period, a taxpayer may continue to carry forward unused credits for use in

any subsequent tax years if the taxpayer:

(a) is engaged in this State in an activity or activities listed under the North American Industry Classification System Manual

(NAICS) Section 31, 32, or 33;

(b)(i) is employing 1,000 or more full-time workers in this State and having a total capital investment in this State of not less than

$500 million; or

(ii) is employing 850 or more full-time workers in this State and having a total capital investment in this State of not less than

$750 million; and

Limitations

Credits carried forward beyond the initial 10-year period may not reduce a taxpayer's state income tax liability in any subsequent

tax year by more than 25%.

An entity subject to the license tax provided in Section 12-20-100 is limited to $5 million dollars in credit for investments made

after June 30, 1998.

Recapture

If during any tax year and before the end of applicable recovery period for such property as determined under IRC

Section 168(e), the taxpayer disposes of or removes from this State qualified manufacturing and productive equipment

property, then the income tax due by the taxpayer for the current tax year must be increased by an amount of any

credit claimed in prior years with respect to such property determined by assuming the credit is earned ratably over

the useful life of the property and recapturing pro rata the unearned portion of the credit. Complete TC-11R.

Reduction in basis

For South Carolina income tax purposes, the basis of the qualified manufacturing and productive equipment property must be

reduced by the amount of any credit claimed with respect to the property. A taxpayer required to recapture the capital

investment credit may increase the basis of the property by the amount of any basis reduction attributable with claiming the

investment tax credit in prior years. The basis must be increased in the year in which the credit is recaptured.

Social Security Privacy Act Disclosure

It is mandatory that you provide your social security number on this tax form if you are an individual taking this credit. 42 U.S.C

405(c)(2)(C)(i) permits a state to use an individual's social security number as means of identification in administration of any tax. SC

Regulation 117-201 mandates that any person required to make a return to the SC Department of Revenue shall provide identifying

numbers, as prescribed, for securing proper identification. Your social security number is used for identification purposes.

The Family Privacy Protection Act

Under the Family Privacy Protection Act, the collection of personal information from citizens by the Department of Revenue is limited to

the information necessary for the Department to fulfill its statutory duties. In most instances, once this information is collected by the

Department, it is protected by law from public disclosure. In those situations where public disclosure is not prohibited, the Family

Privacy Protection Act prevents such information from being used by third parties for commercial solicitation purposes.

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Form Sc Sch.tc 11 - Capital Investment Credit Page 2

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