Fillable Form Sc1065 - Partnership Return - 2012 (Page 6 of 7) in pdf

STEP-BY-STEP INSTRUCTIONS FOR SC1065

COMPLETING THE SCHEDULE SC-K

STEP 1

Schedule SC-K is a worksheet for making South Carolina adjustments to federal Schedule K items and showing the amount

of these items that are allocated to South Carolina and amounts subject to apportionment.

Column A Computation of Income: Enter the amounts from Column A of federal Schedule K, lines 1 through 13d in the

same line numbers of Column A of SC-K. Total Column A lines 1 - 13d and enter on line 14.

Column B South Carolina Adjustment: Include in Column B additions and subtractions resulting from differences

between federal and South Carolina law. Show any income taxed by South Carolina but not subject to federal income tax,

such as interest income received from states other than South Carolina, or their political subdivisions as an addition. Some

other examples of additions are:

Expenses deducted on the federal return related to income exempt or not taxable to SC.

Federal bonus depreciation. For the year an asset is placed in service, add back the difference between the depreciation

taken and the depreciation that would have been allowed without bonus depreciation. A subtraction resulting from a

higher SC basis applies to all remaining years of depreciation.

A nonresident seller of South Carolina real property who elects out of installment sales treatment must report the entire

gain for the taxable year in which the sale took place. Show any income not taxed by South Carolina but subject to

federal income tax, such as interest paid by the US government on US savings bonds, treasury bills etc. as a subtraction.

Total Column B lines 1 - 13d and enter on line 14.

Column C Federal Schedule K Amounts after SC Adjustments: This amount is the sum of Columns A and B.

Column D Allocation of Income: Allocation and apportionment statutes are located in SC Code Sections 12-6-2210

through 12-6-2320. After allocating the following items, all remaining items are subject to apportionment as described

below. The following items must be allocated. List amounts allocated to South Carolina in Column D.

Personal service income: Allocate personal service income, including guaranteed payments, to South Carolina if (a)

the income is received by a resident individual or (b) the income is for services performed in South Carolina.

Gains and losses from sale of property: Allocate gains and losses from the sale of real property, less all related

expenses, to the state in which the real property is located, except that the amount of gain which represents the return of

amounts deducted in South Carolina as depreciation is allocated to South Carolina. If a taxpayer’s business is conducted

partly within and partly without South Carolina, allocate gains and losses from sales of tangible personal property

unrelated to the business activity of the taxpayer to the state in which the business situs of the investment is located,

unless the business situs of the investment is partly within and partly without South Carolina. Allocate gains and losses

from sales of intangible personal property not connected with the business of the taxpayer and not held for sale to

customers in the regular course of business to a corporate partner’s principal place of business and a noncorporate

partner’s domicile.

Rents and royalties: Allocate rents and royalties from the lease of rental real estate or tangible personal property not

used or connected with the taxpayer’s trade or business during the year, less all related expenses, to the state where the

property was located at the time the income was derived.

Interest and dividends: Allocate interest and dividends not connected with the taxpayer’s business, less all related

expenses, to a corporate partner’s principal place of business and a noncorporate partner’s domicile.

Other income subject to allocation: Any income, less all related expenses that are not otherwise allocated and that are

unrelated to a taxpayer’s business activity conducted partly within and partly without this State is allocated to the state in

which the business situs of the investment is located. If the business situs of the investment is partly within and partly

without South Carolina, the investment is apportioned using the same formula used for apportioning the net income of the

corporation.

Total Column D lines 1 - 13d and enter on line 14.

Column E Amounts Subject to Apportionment: Enter the amounts in Column E that are not allocated to South Carolina

or any other state. These amounts are subject to apportionment. Total Column E lines 1 – 13d and enter on line 14.

Line 15 – Enter the amounts from federal Schedule K on line 14, Schedule SC-K, Column A.

Line 16 – Enter the amounts allocated to South Carolina from line 14, Schedule SC-K, Column D.

Line 17 – Enter the Net income (loss) subject to apportionment from line 14, Schedule SC-K, Column E.

Form Sc1065 - Partnership Return - 2012 Page 6

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