Fillable Form Sc1065 - Partnership Return - 2012 (Page 4 of 7) in pdf

H. Composite Extensions - In order to extend the time allowed for filing a composite return, file SC4868 using the

name and FEIN of the partnership, estimate the tax due, and pay the tax estimate on or before the 15th day of the 4th

month following the end of the partner’s taxable year. Do not use the SC8736 to extend the time allowed to file a

composite return, file SC4868 instead. For tax years after 2004, nonresident partners may participate in composite

returns even if they have other sources of income taxable to South Carolina. Disregard the other sources of income

taxable to South Carolina when preparing the composite return. For more detailed information, see SC Revenue

Procedure #92-5 on our website

I. Information To Be Furnished To Partners - Supply SC1065 K-1 to each partner. Partnerships receiving passive

activity income and losses from investments located within and without South Carolina must furnish partners with detailed

accountings of these amounts. Similar information must be furnished to partners who did not materially participate in the

trade or business of a partnership engaged in multi-state operations. These partners may have nondeductible passive

losses that cannot be used to offset interest and other business-related portfolio income apportioned to South Carolina.

Acceptable Forms of K-1 Information - If a partnership has more than 50 partners, we request that you submit the

K-1 information on a CD in any file format that is compatible with Microsoft Word or Excel. The CD should be labeled with

the following information: Name of Partnership, Federal Employer Identification Number, South Carolina Partnership File

Number and Tax Year. Excel spreadsheets are also accepted. We will continue to accept paper K-1s, but request the

CD or spreadsheet method of reporting. Permission does not need to be obtained from this office to submit K-1s by these

methods.

K. Tax Credits - Enter non-refundable tax credits on SC1040TC and attach to this return. Attach specific tax credit

schedules to your return. Furnish a statement to each partner indicating the amount of credit allocated to that partner.

L. Allocation and Apportionment of Income: A taxpayer whose entire business is transacted or conducted in SC is

subject to income tax based on the entire taxable income of the business for the taxable year. A taxpayer that transacts

or conducts its business partly within and partly outside of SC is subject to income tax based on the portion of its business

carried on in SC. This portion is determined through allocation and apportionment of income. SC Code §§12-6-2220 and

12-6-2230 provide that certain classes of income, less related expenses, are allocated. The income remaining after

allocation is apportioned in accordance with SC Code §12-6-2240. SC generally requires the use of one of the following

apportionment methods:

A “sales only” apportionment method for taxpayers whose principle business in SC is dealing in tangible personal

property. This method is used by businesses that manufacture, sell, or rent tangible personal property. The

SALES factor is all sales of goods, merchandise and property in South Carolina to anyone other than the US

government, divided by total sales everywhere. The sale takes place where goods are received by the

purchaser or his designee after all transportation is completed. Sales in South Carolina include all rentals not

allocated from tangible personal property located in South Carolina and sales of intangible personal property and

receipts from services of income-producing activities performed entirely within South Carolina. If the

income-producing activity is performed partly within and partly without South Carolina, sales are attributable to

South Carolina to the extent the income-producing activity is performed within South Carolina.

A “gross receipts” apportionment method for taxpayers not dealing in tangible personal property. This method is

used by financial businesses and service businesses, including businesses that install or repair tangible personal

property, and contractors. This apportionment factor is SC gross receipts divided by gross receipts everywhere.

See SC Code §§12-6-2290 and 12-6-2295.

A “special” apportionment method provided in SC Code §12-6-2310 for certain companies, such as railroad

companies, telephone companies, pipeline companies, airline companies, and shipping lines. Use the

appropriate apportionment method in place of sales only or gross receipts.

A taxpayer may apply pursuant to SC Code §12-6-2320 for an individualized apportionment method tailored to a

particular business because the normally required method would not fairly represent the extent of the taxpayer’s

business in SC, or as an economic incentive.

See our publication South Carolina Tax Incentives for Economic Development for details. This publication can be

found on our website at under Publications, Information for Tax Professionals.

Form Sc1065 - Partnership Return - 2012 Page 4

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