Form Sc Sch Tc-4sa - South Carolina Accelerated Small Business Jobs Credit (Page 6 of 14) in pdf

Credit transfer

A taxpayer merger, consolidation or reorganization, where tax attributes survive, does not create new eligibility in the succeeding

taxpayer. Unused job tax credits may be transferred and continued by the succeeding taxpayer subject to the limitations of Section

12-6-3320. When one taxpayer transfers all or substantially all of the assets of its trade or business or operating division to a second

taxpayer, the first taxpayer may assign its related right to credit to the second taxpayer, as long as the required number of new jobs for

that amount of credit is maintained.

Flow-through

A partnership, S corporation or limited liability company (LLC) taxed as a partnership or S corporation may pass through the credit

earned to each shareholder, partner or member. The credit earned by an S corporation owing corporate level income tax must be used

first at the entity level. Only the remaining credit passes through to each shareholder.

The allocation of credit to a shareholder, partner or member must equal the percentage of shareholder's stock or partner's or member's

interest for the tax year multiplied by the amount of the credit earned by the entity. The entity earning the credit may not carry over

credit that passes through to its shareholders, partners, or members.

Amount used

The amount of credit used in a year may not exceed 50% of the taxpayer's South Carolina income tax, bank tax, or insurance premium

tax liability. For credit earned by and flowing through a partnership, S corporation or LLC taxed as a partnership or S corporation, the

credit may not exceed 50% of the shareholder's, partner's, or member's corporate or individual income tax or bank tax liability.

Carryforward

Unused credits may be carried forward for 15 years. Credits carried forward must be used in the order claimed. Credits earned by and

flowing through a partnership, S corporation or LLC taxed as a partnership or S corporation may be carried forward by the partner,

shareholder or member for 15 years from the close of the tax year in which the credit is earned by the S corporation, partnership, or

LLC. Taxpayers claiming this credit and a corporate tax moratorium may carry forward unused amounts until after the moratorium

period expires.

Definitions

"Taxpayer" means a sole proprietor, partnership, corporation of any classification, LLC, or association taxable as a business entity

that is subject to South Carolina corporate or individual income tax, bank tax, or insurance premium tax.

"New job" means a job created in this State at the time a new facility or an expansion is initially staffed. A new job does not include

a job transferred from one site to another site by the taxpayer or a related person, unless the job is transferred to a county where a

federal facility has reduced its permanent employment by 3,000 or more jobs after December 31, 1990. Also included are jobs

reinstated when the employer has rebuilt the facility after (a) more than 50% of it was destroyed by accidental fire, natural disaster, or

act of God; or (b) an involuntary conversion took place through condemnation or exercise of eminent domain by the federal

government or South Carolina or any of its political subdivisions, including a legally binding agreement for the purchase of the

employer’s facility under threat of exercise of eminent domain. The year of reinstatement is the year of creation of a reinstated job.

All reinstated jobs qualify for this credit. No comparison is required between the number of full-time jobs in the tax year and the

number of full-time jobs in the corresponding period of the prior tax year.

"Full-time" means a job requiring a minimum of 35 hours of an employee's time each week for the entire normal year of company

operations or a job requiring a minimum of 35 hours of an employee's time each week for a year in which the employee was hired

initially for or transferred to the South Carolina facility. Two (2) half-time jobs are considered one (1) full-time job. A "half-time job" is

a job requiring a minimum of 20 hours of an employee's time each week for the entire normal year of the company's operations or a

job requiring a minimum of 20 hours of an employee's time each week for a year in which the employee was hired initially for or

transferred to the South Carolina facility.

Annualizing. To determine if the 120% wage threshold is met, gross wages paid for each new job created in the tax year are

annualized. For example, assume a new full-time job created in X County in July 1, 2011 pays a gross wage of $20,000 for the 6

month period July 1, 2011 through December 31, 2011. The annualized salary is $40,000.

The threshold for each full-time job is computed using the following formula:

Full-time job annualized:

Gross wages

12 months

Months worked in tax year

Part-time job annualized:

Gross wages

12 months

40 hours

Months worked in tax year

Half-time hours worked per week

"Manufacturing facility" means an establishment where tangible personal property is produced or assembled.

Form Sc Sch Tc-4sa - South Carolina Accelerated Small Business Jobs Credit Page 6

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