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Title 12 - Taxation

CHAPTER 6.

SOUTH CAROLINA INCOME TAX ACT

ARTICLE 1.

ADOPTION OF INTERNAL REVENUE CODE--DEFINITIONS

SECTION 12-6-10. Short title.

This chapter may be cited as the "South Carolina Income Tax Act".

SECTION 12-6-20. Administration and enforcement of chapter.

The department shall administer and enforce the taxes imposed by this chapter. The department shall make and publish rules and regulations, not inconsistent with this chapter, necessary to enforce its provisions. These rules and regulations have the force of law.

SECTION 12-6-30. Definitions.

As used in this chapter, the following words have the meaning provided unless otherwise required by the context:

(1) "Taxpayer" includes an individual, trust, estate, partnership, association, company, corporation, or any other entity subject to the tax imposed by this chapter or required to file a return.

(2) "Resident individual" means an individual domiciled in this State. A "nonresident individual" means an individual other than a resident individual or a part-year resident.

(3) "Part-year resident" means an individual who is a resident individual for only a portion of the tax year.

(4) "Resident estate" means the estate of a decedent who was domiciled in this State at death. "Nonresident estate" means an estate other than a resident estate.

(5) "Resident trust" means a trust administered in this State. "Nonresident trust" is a trust other than a resident trust.

(6) "Resident beneficiary" means a beneficiary of an estate or trust who is a resident individual, resident estate, resident trust, resident partnership, or resident corporation. "Nonresident beneficiary" means a beneficiary other than a resident beneficiary.

(7) "Resident partner" means a partner who is a resident individual, resident estate, resident trust, or resident corporation or resident partnership during the taxable year. "Nonresident partner" means a partner other than a resident partner.

(8) "Resident corporation" means a corporation whose principal place of business, as defined in item (9), is located within this State. "Nonresident corporation" means a corporation other than a resident corporation.

(9) "Principal place of business" means the domicile of a corporation. However, when none of the business of the corporation is conducted in the state of domicile, the department shall determine the principal place of business of the corporation based upon the available evidence.

(10) "Business" includes trade, profession, occupation, or employment.

(11) "Tangible property" includes real property and corporeal personal property but does not include money, bank deposits, shares of stock, bonds, credits, evidences of debt, choses in action, or evidences of an interest in property.

(12) "Intangible property" means all property other than tangible property.

SECTION 12-6-40. Application of federal Internal Revenue Code to State tax laws.

(A)(1)(a) Except as otherwise provided, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through December 31, 2008, and includes the effective date provisions contained in it.

(b) For purposes of sections 63 and 179 of the Internal Revenue Code, the amendments made by sections 103 and 202 of the Jobs and Growth Tax Relief Reconciliation Act of 2003, P.L. 108-27 (May 28, 2003) are effective only for taxable years beginning after December 31, 2003.

(2)(a) For purposes of this title, "Internal Revenue Code" is deemed to contain all changes necessary for the State to administer its provisions. Unless a different meaning is required:

(i) "Secretary", "Secretary of the Treasury", or "Commissioner" means the Director of the Department of Revenue.

(ii) "Internal Revenue Service" means the department.

(iii) "Return" means the appropriate state return.

(iv) "Income" includes the modifications required by Article 9 of this chapter and allocation and apportionment as provided in Article 17 of this chapter.

Other terms in the Internal Revenue Code must be given the meanings necessary to effectuate this item.

(b) For purposes of Internal Revenue Code Sections 67 (Two Percent Floor on Miscellaneous Itemized Deductions), 71 (Alimony and Separate Maintenance Payments), 85 (Unemployment Compensation), 165 (Losses), 170 (Charitable Contributions), 213 (Medical and Dental Expenses), 219 (Retirement Savings), 469 (Passive Activity Losses and Credits Limited), and 631 (Gain or Loss in the Case of Timber, Coal, or Domestic Iron Ore), "Adjusted Gross Income" for South Carolina income tax purposes means a taxpayer's adjusted gross income for federal income tax purposes without regard to the adjustments required by Article 9 and Article 17 of this chapter.

(c) For a taxpayer utilizing the provisions of Internal Revenue Code Section 1341 (Computation of Tax where Taxpayer Restores Substantial Amount Held under Claim of Right) for South Carolina tax purposes the phrase "taxes imposed by this chapter" means taxes imposed by Chapter 6 of this title.

(d) The terms defined in Internal Revenue Code Sections 7701, 7702, and 7703 have the same meaning for South Carolina income tax purposes, unless a different meaning is clearly required.

(B) All elections made for federal income tax purposes in connection with Internal Revenue Code sections adopted by this State automatically apply for South Carolina income tax purposes unless otherwise provided. A taxpayer may not make an election solely for South Carolina income tax purposes except for elections not applicable for federal purposes, including filing a combined or composite return as provided in Sections 12-6-5020 and 12-6-5030, respectively.

(C) If a taxpayer complies with the provisions of Internal Revenue Code Section 367 (Foreign Corporations), it is not necessary for the taxpayer to obtain the approval of the department. A taxpayer filing a paper return shall attach a copy of the approval received from the Internal Revenue Service to his next South Carolina income tax return. A taxpayer filing an electronic return shall keep a copy of the approval with his tax records.

SECTION 12-6-50. Internal Revenue Code sections specifically not adopted by State.

For purposes of this title and all other titles that provide for taxes administered by the department, except as otherwise specifically provided, the following Internal Revenue Code Sections are specifically not adopted by this State:

(1) Sections 1(a) through 1(e), 3, 11, and 1201 relating to federal tax rates;

(2) Sections 22 through 54, 515, 853, 901 through 908, and 960 relating to tax credits;

(3) Sections 55 through 59 relating to minimum taxes;

(4) Sections 78, 86, 87, 168(k), 168(l), 168(m), 168(n), 196, and 280C relating to dividends received from certain foreign corporations by domestic corporations, taxation of social security and certain railroad retirement benefits, the alcohol fuel credit, bonus depreciation, deductions for certain unused business credits, and certain expenses for which credits are allowable;

(5) Sections 72(m)(5)(B), 72(f), 72(o), 72(q), and 72(t), relating to penalty taxes on certain retirement plan distributions;

(6) Section 172(b)(1) relating to net operating loss carrybacks;

(7) Section 199 relating to the deduction attributable to domestic production activities;

(8) Sections 531 through 564 relating to certain special taxes on corporations;

(9) Sections 581, 582, and 585 through 596 relating to the taxation of banking institutions;

(10) Sections 665 through 668 relating to taxation of certain accumulation distributions from trusts;

(11) Sections 801 through 845 relating to taxation of insurance companies;

(12) Sections 861 through 908, 912, 931 through 940, and 944 through 989 relating to the taxation of foreign income;

(13) Sections 1352 through 1359 relating to an alternative tax on qualifying shipping activities;

(14) Sections 1400 through 1494;

(15) Sections 1501 through 1505 relating to consolidated tax returns; and

(16) Sections 2001 through 7655, 7801 through 7871, and 8001 through 9602, except for Sections 6015 and 6701, and except for Sections 6654 and 6655 which are adopted as provided in Section 12-6-3910 and Section 12-54-55.

SECTION 12-6-60. Role of distribution facility in determining nexus with state for income tax and corporate license fee purposes.

(A) Notwithstanding another provision of this chapter, whether or not a person has nexus with South Carolina for income tax and corporate license fee purposes, is determined without regard to whether the person:

(1) owns or utilizes a distribution facility within South Carolina;

(2) owns or leases property at a distribution facility within South Carolina that is used at, or distributed from, that facility; or

(3) sells property shipped or distributed from a distribution facility within South Carolina.

(B) The distribution facility is not considered to be a fixed place of business in South Carolina for the purposes of nexus.

ARTICLE 5.

TAX RATES AND IMPOSITION

SECTION 12-6-510. Tax rates for individuals, estates, and trusts for taxable years after 1994.

(A) For taxable years beginning after 1994, a tax is imposed on the South Carolina taxable income of individuals, estates, and trusts and any other entity except those taxed or exempted from taxation under Sections 12-6-530 through 12-6-550 computed at the following rates with the income brackets indexed in accordance with Section 12-6-520:

Not over $2,220 2.5 percent of taxable income

Over $2,220 but not over $4,440 $56 plus 3 percent of the excess over

$2,220;

Over $4,440 but not over $6,660 $123 plus 4 percent of the excess over

$4,440;

Over $6,660 but not over $8,880 $212 plus 5 percent of the excess of

$6,660;

Over $8,880 but not over $11,100 $323 plus 6 percent of the excess over

$8,880;

Over $11,100 $456 plus 7 percent of the excess over

$11,100.

(B) The department may prescribe tax tables consistent with the rates set pursuant to subsection (A).

SECTION 12-6-515. State individual income tax bracket reduction.

Notwithstanding any other provision of law, for taxable years beginning after 2006, the rate of tax imposed pursuant to Section 12-6-510(A) on the lowest bracket of South Carolina taxable income is reduced from 2.5 percent to zero percent, and the Department of Revenue shall adjust amounts due in tax tables prescribed by the department.

SECTION 12-6-520. Annual adjustments to individual state income tax brackets; inflation adjustments.

Each December 15, the department shall cumulatively adjust the brackets in Section 12-6-510 in the same manner that brackets are adjusted in Internal Revenue Code Section (1)(f). However, the adjustment is limited to one-half of the adjustment determined by Internal Revenue Code Section (1)(f), may not exceed four percent a year, and the rounding amount provided in (1)(f)(6) is ten dollars. The brackets, as adjusted, apply in lieu of those provided in Section 12-6-510 for taxable years beginning in the succeeding calendar year. Inflation adjustments must be made cumulatively to the income tax brackets.

SECTION 12-6-530. Corporate income tax.

An income tax is imposed annually at the rate of five percent on the South Carolina taxable income of every corporation, other than those described in Sections 12-6-540 and 12-6-550, and any other entity taxed using the rates of a corporation for federal income tax purposes, transacting, conducting, or doing business within this State or having income within this State, regardless of whether these activities are carried on in intrastate, interstate, or foreign commerce. The terms "transacting", "conducting", and "doing business" include transacting or engaging in any activity for the purpose of financial profit or gain.

SECTION 12-6-535. Small business trust taxed at highest rate.

For purposes of Internal Revenue Code Section 641(c), an electing small business trust is taxed at the highest rate provided in Section 12-6-510.

SECTION 12-6-540. Income tax rates for exempt organizations and cooperatives.

An income tax is imposed annually at the rate of five percent on the South Carolina taxable income of an organization described in Internal Revenue Code Sections 501 through 528 (Exempt Organizations) and 1381 (Cooperatives) as computed under Internal Revenue Code Sections 501(b) (unrelated business income), 528(d) (taxable income of homeowners' associations), and 1382 and 1383 (taxation of cooperatives). The modifications provided in Article 9 of this chapter and the allocation and apportionment provisions provided in Article 17 of this chapter apply for the taxes imposed by this section.

SECTION 12-6-545. Income tax rates for pass-through trade and business income; determination of income related to personal services.

(A) As used in this section:

(1) "Active trade or business income or loss" means income or loss of an individual, estate, trust, or any other entity except those taxed or exempted from tax pursuant to Sections 12-6-530 through 12-6-550 resulting from the ownership of an interest in a pass-through business. Active trade or business income or loss does not include:

(a)(i) passive investment income as defined in Internal Revenue Code Section 1362(d) generated by a pass-through business and income of the same type regardless of the type of pass-through business generating it; and

(ii) expenses related to passive investment;

(b) capital gains and losses;

(d) amounts reasonably related to personal services. All amounts paid as compensation and all guaranteed payments for services, but not for the use of capital, as defined in Internal Revenue Code Section 707(c) are deemed to be reasonably related to personal services. In addition, if an owner of a pass-through entity who performs personal services for the entity is not paid a reasonable amount for those personal services as compensation or payments referred to in Internal Revenue Code Section 707(c), all of the owner's income from the entity is presumed to be amounts reasonably related to personal services. For purposes of this section, amounts reasonably related to personal services include amounts reasonably related to the personal services of the owner, the owner's spouse, and any person claimed as a dependent on the owner's income tax return.

(2) "Pass-through businesses" mean sole proprietorships, partnerships, and "S" corporations, including limited liability companies taxed as sole proprietorships, partnerships, or "S" corporations.

(B)(1) Notwithstanding Section 12-6-510, a taxpayer may elect annually to have the income tax at the rate provided in item (2) of this subsection imposed annually on the active trade or business income received by the owner of a pass-through business. For joint returns, the election is effective for both spouses. The amount subject to tax pursuant to this section is not subject to tax pursuant to Section 12-6-510.

(2) The rate of the income tax imposed pursuant to this subsection is:

Taxable Year Beginning in Rate of Tax

2006 6.5 percent

2007 6 percent

2008 5.5 percent

after 2008 5 percent

(C) Notwithstanding any other provision of this chapter, active trade or business loss must first be deducted, dollar for dollar against active trade or business income. Any remaining active trade or business loss is deductible from income taxed under Section 12-6-510 if otherwise allowable.

(D) The department may issue guidance as to what expenses reduce active trade or business income.

(E)(1) Notwithstanding item (A)(1)(d) of this section, if a taxpayer owns an interest in one or more pass-through businesses and his total South Carolina taxable income from pass-through entities for which he performs personal services is one hundred thousand dollars or less, excluding capital gains and losses, then the taxpayer may elect, instead of determining the actual amount of active trade or business income related to his personal services, to treat fifty percent of his active trade or business income as not related to his personal services. For purposes of this item, the term "taxpayer" includes both taxpayers who file a joint return.

(2) The department may provide other methods that may be used to determine an amount that is considered to be unrelated to the owner's personal services if it determines that the benefits to the State of taxing income from personal services at a higher rate are insufficient to justify the burdens imposed on the taxpayer.

(F) An income tax credit available to offset taxes due pursuant to Section 12-6-510 also apply against taxes imposed by this section.

SECTION 12-6-550. Corporations exempt from taxes imposed by sections 12-6-530 and 12-6-540.

The following corporations are exempt from the tax imposed by Section 12-6-530 and Section 12-6-540:

(1) banks as defined in Section 12-11-10;

(2) building and loan associations as defined in Section 12-13-10;

(3) insurance companies;

(4) nonprofit corporations organized pursuant to Chapter 36 of Title 33 for the purpose of providing water supply and sewage disposal or a combination of those services;

(5) organizations exempt from income taxes pursuant to Section 33-49-120.

SECTION 12-6-555. Persons not having nexus with state other than contract for commercial printing in state not subject to state income or sales and use taxes; conditions.

Notwithstanding any other provision of this chapter, with respect to a person that does not otherwise have a nexus with South Carolina, and that has contracted with a commercial printer for printing:

(1) the ownership or leasing by that person of tangible or intangible property located at the South Carolina premises of the commercial printer and used in connection with printing contracts;

(2) the sale by that person of property printed or imprinted at and shipped or distributed from the South Carolina premises of the commercial printer by the commercial printer;

(3) the activities performed pursuant or incident to a printing contract by or on behalf of that person at the South Carolina premises of the commercial printer by the commercial printer; or

(4) the activities performed pursuant or incident to a printing contract by the commercial printer in South Carolina for or on behalf of that person; shall not cause that person to have income derived from sources within South Carolina for purposes of the taxes imposed by this chapter, unless that person engages in other activities in South Carolina that exceed the protection of 15 U.S.C. Section 381. The person shall not be considered to have a fixed place of business in South Carolina at either the commercial printer's premises or at any place where the commercial printer performs printing and related services on behalf of that person.

SECTION 12-6-560. Computation of resident individual's gross, adjusted gross, and taxable income.

A resident individual's South Carolina gross income, adjusted gross income, and taxable income is computed as determined under the Internal Revenue Code with the modifications provided in Article 9 of this chapter and subject to allocation and apportionment as provided in Article 17 of this chapter.

SECTION 12-6-570. Computation of nonresident individual, trust, estate, and beneficiary's gross, adjusted gross, and taxable income.

A nonresident individual, nonresident trust, nonresident estate, and nonresident beneficiary's South Carolina gross income, adjusted gross income, and taxable income is computed as provided in Section 12-6-1720.

SECTION 12-6-580. Computation of corporation's gross and taxable income.

A corporation's South Carolina gross income, taxable income, and the unrelated business income of a corporation exempt from taxation under Internal Revenue Code Section 501 et seq., is computed as determined under the Internal Revenue Code with the modifications provided in Article 9 of this chapter and subject to allocation and apportionment as provided in Article 17 of this chapter.

SECTION 12-6-590. Treatment of "S" corporations for tax purposes; shareholders.

(A) Except as provided in Section 12-6-1210(F), an "S" Corporation having a valid federal election under the Internal Revenue Code Subchapter "S" is not subject to tax under this chapter to the extent it would be exempt from federal corporate income tax. Each shareholder shall include its share of South Carolina "S" Corporation income on the shareholder's income tax return. All of the provisions of the Internal Revenue Code apply to determine the gross income, adjusted gross income, and taxable income of an "S" Corporation and its shareholders subject to the modifications provided in Article 9 of this chapter and subject to allocation and apportionment as provided in Article 17 of this chapter.

(B) A taxpayer who is a shareholder in a bank, as defined in Section 581 of the IRC, having a valid federal election under Subchapter S, is allowed a tax credit that equals the difference between: (i) the taxpayer's tax as computed pursuant to this chapter, including all credits other than the credit allowed pursuant to this section; and (ii) the tax as computed pursuant to this chapter, including all credits other than the credit allowed pursuant to this section, but excluding the taxpayer's prorata share of the net items of income and expense of the bank. The credit may not exceed the taxpayer's prorata share of the tax imposed on the bank pursuant to Section 12-11-30. These taxpayers are taxed pursuant to the provisions of this section and Section 12-6-545, notwithstanding the exception contained in Section 12-6-545(A)(1).

SECTION 12-6-600. Taxation of partnerships.

An entity treated as a partnership for federal income tax purposes is not subject to tax under this chapter. Each partner shall include its share of South Carolina partnership income on the partner's respective income tax return. All of the provisions of the Internal Revenue Code apply to determine the gross income, adjusted gross income, and taxable income of a partnership and its partners, subject to the modifications provided in Article 9 of this chapter and subject to allocation and apportionment as provided in Article 17 of this chapter.

SECTION 12-6-610. Computation of gross and taxable income of resident estate or trust.

A resident estate or resident trust's South Carolina gross income and taxable income is computed as determined under the provisions of the Internal Revenue Code, including the provisions of Internal Revenue Code Section 584 (Common Trust Funds), with the modifications provided in Article 9 of this chapter and subject to allocation and apportionment as provided in Article 17 of this chapter.

SECTION 12-6-620. Computation of gross, adjusted gross, and taxable income of nonresident individual, trust, and estate.

A nonresident individual, nonresident trust, and nonresident estate's South Carolina gross income, adjusted gross income, and taxable income is computed as provided in Section 12-6-1720.

SECTION 12-6-630. Taxation of entities not specified or excluded.

Entities, other than those specified in Sections 12-6-560 through 12-6-620 and those specifically excluded from income taxation under Section 12-6-550, are taxed as provided in the Internal Revenue Code with the modifications provided in Article 9 of this chapter and subject to allocation and apportionment as provided in Article 17 of this chapter.

SECTION 12-6-640. Use of monies appropriated to Commissioners of Pilotage.

Monies appropriated to the Commissioners of Pilotage must be used as a grant to the Maritime Association of the Port of Charleston for the purpose of supporting the establishment of a maritime exchange system to provide vessel information services and is not taxable income for purposes of this chapter.

ARTICLE 9.

TAXABLE INCOME CALCULATION

SECTION 12-6-1110. Modifications of gross, adjusted gross, and taxable income calculated under Internal Revenue Code; federal Section 1354 elections.

(A) For South Carolina income tax purposes, gross income, adjusted gross income, and taxable income as calculated under the Internal Revenue Code are modified as provided in this article and subject to allocation and apportionment as provided in Article 17 of this chapter.

(B) If a taxpayer has made an election pursuant to Internal Revenue Code Section 1354 to be taxed under the provisions of Section 1352-1359 of the Internal Revenue Code, Election to Determine Taxable Income from Certain International Shipping Activities, the election is not effective for South Carolina income tax purposes, and the taxpayer is taxed in accordance with this chapter as though no federal Section 1354 election has been made.

SECTION 12-6-1120. Gross income; computation; modifications.

South Carolina gross income is computed by making modifications to gross income provided in the Internal Revenue Code as follows:

(1) The exclusion from gross income authorized by Internal Revenue Code Section 103 (Interest on State and Local Bonds) is modified to exempt only interest on obligations of this State or any of its political subdivisions, and to exempt interest upon obligations of the United States. This modification applies to all Internal Revenue Code Sections referencing Section 103.

(2) South Carolina gross income does not include any state income tax refund included in federal gross income.

(3) Reserved

(4) South Carolina gross income is determined without application of Internal Revenue Code Sections 78 (Gross-up of Dividends received from Certain Foreign Corporations), 86 (Social Security and Tier 1 Railroad Retirement Benefits), and 87 (Alcohol Fuel Credit).

(5) The exclusions permitted by Internal Revenue Code Sections 912 (Exemptions for Certain Allowances for Citizens or Residents of the United States Living Abroad) and 931 through 936 (Income from Possessions of the United States) are not permitted.

(6) A beneficiary of a trust shall exclude from South Carolina taxable income any excess distributions by trusts included in the beneficiary's federal taxable income by reason of Internal Revenue Code Sections 665 through 669 (Treatment of Excess Distributions by Trusts) or any comparable provisions.

(7) South Carolina gross income does not include compensation or retirement benefits received from the United States or any state for service in a state National Guard or a reserve component of the Armed Forces of the United States. This exclusion only applies to compensation and retirement benefits received for the customary annual training period not to exceed fifteen days for guard members or fourteen days plus travel time for reserve members, weekend drills, and inactive duty training. National Guard or reserve members that are called to active duty are allowed to deduct fifteen days of active duty pay if they have not excluded pay for the annual training period for the same taxable year.

(8) Each partner in the Palmetto Seed Capital Fund Limited Partnership (Fund) established pursuant to Section 41-44-60 shall exclude from South Carolina gross income seventy-five percent of the partner's proportionate share of income the fund derives from a South Carolina business which is either:

(i) established and operated in a least developed county as defined in Section 12-6-3360; or

(ii) invested in agriculture, aquaculture, or a related business or in a business created by a socially or economically disadvantaged individual as defined in 13 Code of Federal Regulations, Sections 124.105(A) and 124.106 (1987).

(9) Notwithstanding Section 12 of Act 101 of 1985, Internal Revenue Code Section 7518 applies retroactively to taxable years beginning after 1986 and applies to any taxpayer.

(10) South Carolina gross income does not include the amounts excluded by Section 59-4-100 of the South Carolina Tuition Prepayment Program.

SECTION 12-6-1130. Taxable income; computation; modifications.

South Carolina taxable income is computed by making modifications to deductions provided in the Internal Revenue Code as follows:

(1) The disallowance of deductions relating to tax-exempt income required by Internal Revenue Code Section 265 applies if the related income is exempt for South Carolina income tax purposes, whether or not the income is exempt for federal purposes. If an expense or interest is disallowed under Section 265 for federal purposes, but is related to income taxed in South Carolina, that expense or interest may be deducted for South Carolina income tax purposes.

(2) The deduction for taxes permitted by Internal Revenue Code Section 164 is computed in the same manner as provided in Section 164 except there is no deduction for state and local income taxes, state and local franchise taxes measured by net income, other income taxes, or taxes measured with respect to net income. In addition, if a taxpayer elects, pursuant to Section 164, to deduct state and local sales taxes instead of state and local income taxes, the taxpayer may not deduct state and local sales and use taxes.

This modification is limited for individual taxpayers to the excess of itemized deductions over the standard deduction that would be allowed if the taxpayer had used the standard deduction for federal income tax purposes.

(3) For purposes of computing the deduction for estate taxes allowed by Internal Revenue Code Section 691(c), "estate tax" means the South Carolina Estate Tax including any South Carolina generation-skipping transfer tax.

(4) A net operating loss deduction is computed in accordance with the Internal Revenue Code except that:

(a) All items of income and deductions used in computing the net operating loss deduction are adjusted as provided in this article.

(b) No carrybacks are allowed.

(c) A federal election to carryback a net operating loss deduction does not affect the computation of this deduction for South Carolina income tax purposes.

(d) A net operating loss is subject to allocation and apportionment under Article 17 of this chapter in the year the loss is incurred.

(5) A corporation may not carry back a net capital loss as permitted by Internal Revenue Code Section 1212(a). A net capital loss may be carried forward to future years to the extent provided in Internal Revenue Code Section 1212(a).

[For tax years through 2010, this subsection reads as follows:]

(6) In computing the depletion deduction pursuant to Internal Revenue Code Sections 611 through 613, a taxpayer who allocates or apportions income under the provisions of Article 17 of this chapter has the option of:

(a) apportioning the deduction according to the appropriate South Carolina apportionment percentage provided in Sections 12-6-2250 through 12-6-2310; or

(b) allocating the deduction to South Carolina with respect to mines, oil and gas wells, and other natural deposits located in this State. The amount allocated to South Carolina may not exceed fifty percent of the net income apportioned to South Carolina by Sections 12-6-2250 through 12-6-2310.

[Effective for tax years after 2010, this subsection reads as follows:]

(6) In computing the depletion deduction pursuant to Internal Revenue Code Sections 611 through 613, a taxpayer who allocates or apportions income pursuant to the provisions of Article 17 of this chapter has the option of:

(a) apportioning the deduction according to the appropriate South Carolina apportionment percentage provided in Sections 12-6-2252 through 12-6-2310; or

(7) The limiting provisions of Internal Revenue Code Section 280C for certain expenses for which credits are allowable do not apply.

(8) Adjusted gross income and taxable income are computed without the deductions for certain unused business credits authorized by Internal Revenue Code Section 196.

(9) If for federal income tax purposes a taxpayer claims a credit which requires a reduction of basis to Section 38 property under Internal Revenue Code Section 50(c), the taxpayer may deduct the amount of the basis reduction for South Carolina income tax purposes by the amount of the basis reduction in the tax year in which basis is reduced for federal income tax purposes.

(10) If for federal income tax purposes a taxpayer's mortgage interest deduction is reduced pursuant to Internal Revenue Code Section 163(g), the taxpayer may deduct the amount of the federal interest deduction reduction.

(11) A dividend from a foreign corporation is treated as a dividend from a domestic corporation for the purposes of the dividends received deduction under Section 243 of the Internal Revenue Code.

(12) The deduction for charitable contributions allowed by Section 170 of the Internal Revenue Code is determined in the same manner as provided in Section 170 of the code except that no deduction is allowed unless, in addition to the requirements of Section 170 of the Internal Revenue Code, the contribution also meets the requirements of Section 12-6-5590.

(13) Adjusted gross income and taxable income are computed without the deduction allowed pursuant to Internal Revenue Code Section 199 relating to domestic production activities.

(14)(a) A deduction is not allowed a person for the accrual of an expense or interest if the payee is a related person and the payment is not made in the taxable year of accrual or before the payer's income tax return is due, without regard to extensions, for the taxable year of accrual. Except as provided in subitem (b), deductions disallowed pursuant to this section are allowed when the payment is made. The holder shall include the payment in income in the year the debtor is entitled to take the deduction. This section does not apply to payments deemed to be made by the application of South Carolina's adoption of Internal Revenue Code Section 482, 7872, a similar provision of the Internal Revenue Code or state law.

(b) Notwithstanding subitem (a), unless the director is satisfied that tax avoidance is not a significant purpose of the transaction, an interest deduction is not allowed for the accrual or payment of interest on obligations issued as a dividend or paid instead of paying a dividend. This interest must be treated as a dividend to the debtor's shareholders when it is paid, and if the holder of the obligation is not a shareholder at that time, a payment from the shareholders to the holder at that time.

(c) For purposes of this item, a related person includes a person that bears a relationship to the taxpayer as described in Section 267 of the Internal Revenue Code.

SECTION 12-6-1140. Deductions from individual taxable income.

There is allowed as a deduction in computing South Carolina taxable income of an individual the following:

(1) a net gain deduction as provided in Section 12-6-1150;

(2) an additional deduction for dependents under six years of age as provided in Section 12-6-1160;

(3) a deduction as provided in Section 12-6-1170;

(4) amounts included in South Carolina gross income received for disability retirement due to permanent and total disability by a person who could qualify for the homestead exemption under Section 12-37-250 by reason of being classified as totally and permanently disabled;

(5) expenses incurred by taxpayers as provided in Internal Revenue Code Section 162(h) without regard to limitations in Section 162(h)(4);

(6) a subsistence allowance of eight dollars a day for federal, state, and local law enforcement officers paid by a political subdivision of this State, the government of this State, or the federal government, for each regular work day in a taxable year and full-time firefighters and emergency medical service personnel may deduct as a subsistence allowance eight dollars a day for each regular work day in a taxable year;

(7)(a) Two thousand dollars for each adopted special needs child who is:

(i) dependent upon and receiving chief support from the taxpayer;

(ii) under the age of twenty-one; and

(iii) enrolled in an accredited school or college or is incapable of self-support because of mental or physical defects.

(b) For purposes of this item, a special needs child is a person who is:

(i) under eighteen at the time of adoption;

(ii) the dependent of a public or private nonprofit adoption agency prior to the adoption;

(iii) legally free for adoption; and

(iv) unlikely to be adopted without assistance as determined by the South Carolina Department of Social Services because of conditions such as ethnic minority status, age, sibling group membership, medical condition, or physical, mental, or emotional handicaps.

(c) The entire deduction is allowed for a taxable year even if the special needs child survives for only part of the taxable year.

(8) RESERVED.

(9) Deleted.

(10)(a) A deduction calculated as provided in this item for a volunteer firefighter, rescue squad member, volunteer member of a Hazardous Materials (HAZMAT) Response Team, reserve police officer, Department of Natural Resources deputy enforcement officer, or member of the State Guard not otherwise eligible for this exemption.

(b) An individual may receive only one deduction pursuant to this item. The Board of Economic Advisors annually shall estimate a maximum deduction that may be permitted under this section for a taxable year based on an individual income tax revenue loss of three million one hundred thousand dollars attributable to this deduction and shall certify that maximum deduction to the Department of Revenue and for the applicable taxable year, the maximum deduction amount must not exceed the lesser of the certified estimate or three thousand dollars.

(c)(i) Only a volunteer earning a minimum number of points pursuant to Section 23-9-190 is eligible for this deduction unless otherwise provided in this item.

(ii) In the case of a reserve police officer and in lieu of minimum points determining eligibility, this deduction is allowed only if the reserve police officer's coordinator-supervisor certifies in writing to the officer that the officer met all requirements of Chapter 28, Title 23 applicable to a reserve police officer for the entire taxable year.

(iii) In the case of a Department of Natural Resources deputy enforcement officer and in lieu of minimum points determining eligibility, this deduction is allowed only if the deputy enforcement officer's supervisor certifies in writing to the officer that the officer met all requirements of Section 50-3-315 for the entire taxable year.

(iv) In the case of a member of the State Guard and in lieu of minimum points determining eligibility, this deduction is allowed only if the State Guard member completes a minimum of sixteen hours of training or drill each month, equating to one hundred ninety-two hours a year, and the member's commanding officer certifies in writing to the member that the member met these requirements.

(d) These certifications from supervisors of taxpayers claiming the deduction must be on a form approved by the department. The department may require a copy of the certification be attached to the taxpayer's income tax return or otherwise be made available to the department.

(11) contributions to the South Carolina Tuition Prepayment Program to the extent provided in Section 59-4-100 and to the South Carolina College Investment Program to the extent provided in Section 59-2-80.

SECTION 12-6-1150. Net capital gain; deduction from taxable income for individuals, estates, and trusts.

(A) Individuals, estates, and trusts are allowed a deduction from South Carolina taxable income equal to forty-four percent of net capital gain recognized in this State during a taxable year. In the case of estates and trusts, the deduction is applicable only to income taxed to the estate or trust or individual beneficiaries and not income passed through to nonindividual beneficiaries.

(B)(1) South Carolina income includes capital gains and losses from partnerships and "S" Corporations.

(2) Net capital gain is as defined in Internal Revenue Code, Section 1222 and related sections.

SECTION 12-6-1160. Dependent deduction for resident individual.

A resident individual taxpayer is allowed a deduction for each dependent claimable on the taxpayer's federal income tax return who has not yet attained the age of six years during the applicable tax year. This deduction is contingent upon the identification in the annual general appropriations act of revenues sufficient to offset the revenue loss caused by the exemption. The deduction allowed by this section is an amount equal to a percentage of the federal income tax personal exemption amount allowed for the applicable taxable year as follows:

Taxable year 1994 twenty-five percent

Taxable year 1995 fifty percent

Taxable year 1996 seventy-five percent

Taxable years after 1996 one hundred percent

SECTION 12-6-1170. Retirement income deduction from taxable income for individual.

(A)(1) An individual taxpayer who is the original owner of a qualified retirement account is allowed an annual deduction from South Carolina taxable income of not more than three thousand dollars of retirement income received. Beginning in the year in which the taxpayer reaches age sixty-five, the taxpayer may deduct not more than ten thousand dollars of retirement income that is included in South Carolina taxable income.

(2) The term "retirement income", as used in this subsection, means the total of all otherwise taxable income not subject to a penalty for premature distribution received by the taxpayer or the taxpayer's surviving spouse in a taxable year from qualified retirement plans which include those plans defined in Internal Revenue Code Sections 401, 403, 408, and 457, and all public employee retirement plans of the federal, state, and local governments, including military retirement.

(3) A surviving spouse receiving retirement income that is attributable to the deceased spouse shall apply this deduction in the same manner that the deduction applied to the deceased spouse. If the surviving spouse also has another retirement income, an additional retirement exclusion is allowed.

(4) The department may require the taxpayer to provide information necessary for proper administration of this subsection.

(B) Beginning for the taxable year during which a resident individual taxpayer attains the age of sixty-five years, the resident individual taxpayer is allowed a deduction from South Carolina taxable income received in an amount not to exceed fifteen thousand dollars reduced by any amount the taxpayer deducts pursuant to subsection (A) not including amounts deducted as a surviving spouse. If married taxpayers eligible for this deduction file a joint federal income tax return, then the maximum deduction allowed is fifteen thousand dollars in the case when only one spouse has attained the age of sixty-five years and thirty thousand dollars when both spouses have attained such age.

SECTION 12-6-1175. Wages paid to unauthorized alien; business expense deduction disallowed.

(A) As used in this section:

(1) "Unauthorized alien" means an unauthorized alien as defined by 8 USC Section 1324A(h)(3).

(2) "Labor services" means the physical performance of services in this State.

(B) On or after January 1, 2009, no wages or remuneration for labor services to an individual of six hundred dollars or more per annum may be claimed and allowed as a deductible business expense for state income tax purposes by a taxpayer if the individual is an unauthorized alien. The provisions of this subsection shall apply whether or not an Internal Revenue Service Form 1099 is issued in conjunction with the wages or remuneration.

(C) This section shall not apply to a business domiciled in this State that is exempt from compliance with federal employment verification procedures under federal law.

(D) This section shall not apply to an individual hired by the taxpayer prior to January 1, 2009.

(E) This section shall not apply to a taxpayer where the individual being paid is not directly compensated or employed by said taxpayer.

(F) This section shall not apply to wages or remuneration paid for labor services to any individual whose employment authorization status was verified in accordance with the provisions of Section 41-8-20.

(G) A taxpayer must not be held liable for failing to comply with the provisions of this section, if, based on a reasonable investigation of the individual, the taxpayer did not know or should not have known that the individual was an unauthorized alien. For purposes of this subsection, a taxpayer shall be deemed to have conducted a reasonable investigation if the individual met the requirements of subsection (F), and the information provided by the individual to the taxpayer was facially correct.

(H) The director of the South Carolina Department of Revenue is authorized to prescribe forms and promulgate regulations deemed necessary in order to administer and effectuate this section in accordance with the provisions of Chapter 23 of Title 1 of the South Carolina Code of Laws.

(I) The director of the Department of Revenue shall send written notice of this section to all South Carolina employers no later than July 1, 2008.

SECTION 12-6-1180. Repealed by 2000 Act No. 399, Section 4(B), eff August 17, 2000.

SECTION 12-6-1190. Cost recovery of retirement benefits from retirement systems maintained by the State or its political subdivisions.

Retirees receiving benefits from the various state retirement systems or any other retirement plan maintained by a political subdivision of this State who have recovered all or a part of their recoverable costs in their retirement benefits for federal income tax purposes before January 1, 1989, are considered to have recovered those costs for purposes of the state income tax. For taxable years beginning after 1988, cost recovery of these retirement benefits is the same for both state and federal income tax purposes.

SECTION 12-6-1200. Exclusion from taxable income of amounts excluded from federal income tax by United States treaty.

South Carolina taxable income does not include amounts excluded from federal income tax by reason of a treaty of the United States.

SECTION 12-6-1210. Deductions for capital expenses, depreciation, gains and losses; change in accounting method; certain elections for special tax treatment; provisions of federal law.

(A) If as of January 1, 1985, a taxpayer is for federal income tax purposes amortizing a capital expense paid or incurred before January 1, 1985, as provided in Internal Revenue Code Sections 171 (Amortization of Bond Premium), 174 (Research and Experimental Expenditures), 185 (Amortization of Railroad Grading and Tunnel Bores), 189 (Amortization of Real Property Construction Period Interest and Taxes), or 194 (Amortization of Reforestation Expenditures), the taxpayer is allowed to deduct for South Carolina income tax purposes the amount amortized and deducted for federal income tax purposes. At the expiration of the amortization for federal income tax purposes, the taxpayer may continue to amortize, for South Carolina income tax purposes, the balance of the capital expense, if any, using the same rate of amortization until the cost of the item has been fully amortized for South Carolina income tax purposes.

(B) Except as provided in subsection (C), if, as of January 1, 1985, a taxpayer is deducting the cost of personal property placed in service before 1985, or the cost of improvements to real property paid or incurred before January 1, 1985, as provided in Internal Revenue Code Section 168, the taxpayer is allowed for South Carolina income tax purposes the same annual deduction as allowed for federal tax purposes. Beginning with the year following the expiration of the deductions for federal tax purposes, the balance of the deductible cost, if any, may be deducted at the rate of fifty percent a year for personal property and twenty percent a year for real property improvements, until the entire deductible cost has been deducted for South Carolina income tax purposes. The deduction authorized by this subsection may not exceed the taxpayer's depreciable basis.

(C) If a taxpayer has a higher basis in assets for South Carolina income tax purposes, the taxpayer may continue to depreciate the assets, to the extent depreciable, in the manner in which the assets were being depreciated before January 1, 1985, if the higher basis is the result of:

(1) a taxable corporate liquidation before January 1, 1985;

(2) an exchange of property before January 1, 1985, that qualified under Internal Revenue Code Section 1031, but did not similarly qualify under Section 12-7-930, as in effect on December 31, 1984, as a result of the property received in the exchange not having a situs in South Carolina; or

(3) Internal Revenue Code Section 179 before January 1, 1985.

(D) If a taxpayer is reporting income from a corporate liquidation distribution under Internal Revenue Code Section 337 using the installment method of reporting or from an installment sale under Internal Revenue Code Section 453, and the taxpayer has previously reported all the gain for South Carolina income tax purposes, then South Carolina taxable income must be reduced by the amount of the installment gain. If a taxpayer has elected installment sale reporting for South Carolina purposes and not federal purposes, the taxpayer shall continue to report gain on the South Carolina tax return in addition to income otherwise taxable.

(E) A taxpayer reporting income or deducting expenses over a time period as a result of a change of accounting method or accounting year, shall report income or deduct expenses in the manner provided in the Internal Revenue Code and approved by the Internal Revenue Service. At the expiration of the authorized adjustment period, the balance of the income or expense must be reported or deducted in the same manner and amount for South Carolina income tax purposes until all of the income or expenses have been fully reported or deducted.

(F) If a South Carolina taxpayer had a valid "S" election in effect for federal tax purposes before January 1, 1985, but has not elected that treatment for South Carolina income tax purposes, the taxpayer may at its option continue to be subject to the tax provided in Section 12-6-530 or the taxpayer may affirmatively elect South Carolina "S" Corporation status. The election may be made by filing a statement or federal "S" Corporation election with all of the shareholders consenting to the state election or all shareholders can indicate their consent by reporting the "S" Corporation income or loss on their individual or composite South Carolina return(s).

(G) If before January 1, 1985, a taxpayer has made an election pursuant to Internal Revenue Code Section 83(b) (Election to Include Property Transferred in Connection with Performance of Services in the Year of Transfer), the election is not effective for South Carolina income tax purposes unless the taxpayer reported income in a manner consistent with the election on the South Carolina income tax return for the year of the election. Otherwise, the taxpayer is taxed under the provisions of Internal Revenue Code Section 83 when income is otherwise realized and recognized as though no Section 83(b) election had been made.

(H) An incentive stock option issued under Internal Revenue Code Section 422A is considered a qualified option or incentive stock option for South Carolina income tax purposes whether granted before or after January 1, 1985.

(I) A taxpayer may not deduct a capital loss carryover under Internal Revenue Code Section 1212 from a tax year before January 1, 1985, for South Carolina income tax purposes.

(J) A net operating loss carryforward under Section 12-7-705 as in effect on December 31, 1984, is allowed for South Carolina income tax purposes before loss carryforwards pursuant to the Internal Revenue Code Section as modified by Article 9 of this chapter, but the same loss may not be deducted more than once. A net operating loss that has not expired before January 1, 1985, expires under the rules provided in Internal Revenue Code Section 172.

(K) A taxpayer receiving an annuity before January 1, 1985, that is subject to tax pursuant to Internal Revenue Code Section 72 shall continue to report income from the annuity in the manner provided in Section 12-7-560(2) in effect on December 31, 1984.

(L) If a taxpayer is subject to the provisions of Internal Revenue Code Sections 483 (Interest on Certain Deferred Payments) or 1271 through 1288 (Special Rules for Bonds and Other Debt Instruments) as a result of a contract entered into before 1985, then no recomputation of principal and income is required.

(M) For a taxable year beginning after December 31, 1984, to the extent gross income, adjusted gross income, or taxable income of any taxpayer is affected by a provision of federal law enacted before January 1, 1985, which provision is not contained in the Internal Revenue Code, the provision is applicable in determining the South Carolina gross, adjusted gross, and taxable income of the taxpayer in the appropriate taxable year.

SECTION 12-6-1220. Individual Development Account.

Families on AFDC and those not receiving welfare but whose household income falls below one hundred eighty-five percent of the federal poverty level may own an Individual Development Account. Contributions to and interest on these accounts are tax free, and a recipient may accrue up to ten thousand dollars in the account. Withdrawals used for education or job training or to start a business or to purchase a home are tax free. Withdrawals for other purposes are not tax free.

The State shall seek a waiver from the federal government providing that no lump sum payment of ten thousand dollars or less deposited in an Individual Development Account within thirty days of receipt will make the family ineligible for receipt of AFDC.

ARTICLE 11.

CATASTROPHE SAVINGS ACCOUNT

SECTION 12-6-1610. Definitions.

As used in this article:

(1) "Qualified catastrophe expenses" mean expenses paid or incurred by reason of a major disaster that has been declared by the Governor to be an emergency by executive order.

(2) "Qualified deductible" means the deductible for the individual's homeowner's policy for a taxpayer's legal residence.

(3) "Legal residence" means the taxpayer's legal residence pursuant to Section 12-43-220(c).

SECTION 12-6-1620. "Catastrophe Savings Account" defined; exemptions allowed; contributable amount; attachment and garnishment.

(A)(1) An individual taxpayer is allowed a deduction from the tax imposed pursuant to Section 12-6-510 for amounts contributed to a Catastrophe Savings Account in accordance with subsection (B)(3); and

(2) all interest income earned by the Catastrophe Savings Account is exempt from the tax imposed pursuant to Section 12-6-510 as provided in this article.

(B)(1) As used in this article, "Catastrophe Savings Account" means a regular savings account or money market account established by an insurance policyholder for residential property in this State to cover an insurance deductible under an insurance policy for the taxpayer's legal residence property that covers hurricane, rising floodwaters, or other catastrophic windstorm event damage or by an individual to cover self-insured losses for the taxpayer's legal residence from a hurricane, rising floodwaters, or other catastrophic windstorm event. The account must be labeled as a Catastrophe Savings Account in order to qualify as a Catastrophe Savings Account as defined in this article. A taxpayer shall establish only one Catastrophe Savings Account and shall specify that the purpose of the account is to cover the amount of insurance deductibles and other uninsured portions of risks of loss from hurricane, rising floodwater, or other catastrophic windstorm event.

(2) A Catastrophe Savings Account is not subject to attachment, levy, garnishment, or legal process in this State.

(3) The total amount that may be contributed to a Catastrophe Savings Account must not exceed:

(a) in the case of an individual whose qualified deductible is less than or equal to one thousand dollars, two thousand dollars;

(b) in the case of an individual whose qualified deductible is greater than one thousand dollars, the amount equal to the lesser of fifteen thousand dollars or twice the amount of the taxpayer's qualified deductible; or

(c) in the case of a self-insured individual who chooses not to obtain insurance on his legal residence, two hundred fifty thousand dollars, but shall not exceed the value of the individual taxpayer's legal residence.

(4) If a taxpayer contributes in excess of the limits provided in item (3), the taxpayer shall withdraw the amount of the excess contributions and include that amount in South Carolina income for purposes of Section 12-6-510 in the year of withdrawal.

SECTION 12-6-1630. Taxation of distributions or at death of account owner.

(A) A distribution from a Catastrophe Savings Account must be included in the income of the taxpayer unless the amount of the distribution is used to cover qualified catastrophe expenses.

(B) No amount is included in income, pursuant to subsection (A) of this section, if the qualified catastrophe expenses of the taxpayer during the taxable year are equal to or greater than the aggregate distributions during the taxable year.

(C) If aggregate distributions exceed the qualified catastrophe expenses during the taxable year, the amount otherwise included in income must be reduced by the amount of the distributions for qualified catastrophe expenses.

(D)(1) The tax paid pursuant to Section 12-6-510 attributable to a taxable distribution must be increased by two and one-half percent of the amount which is includable in income.

(2) This additional tax does not apply if the:

(a) taxpayer no longer owns a legal residence that qualifies under Section 12-43-220(C); or

(b) distribution is from an account conforming with Section 12-6-1620(B)(3)(c) and is made on or after the date on which the taxpayer attains the age of seventy.

(E)(1) No amount is includable in taxable income, pursuant to subsection (A) of this section, if the distribution is from an account conforming with Section 12-6-1620(B)(3)(a) or (b) and is made on or after the date on which the taxpayer attains the age of seventy.

(2) If a taxpayer receives a nontaxable distribution under this subsection, the taxpayer must not make further contributions to any Catastrophe Savings Account.

(F) If a taxpayer who owns a Catastrophe Savings Account dies, his account is included in the income of the person who receives the account, unless that person is the surviving spouse of the taxpayer. Upon the death of the surviving spouse, the account is included in the income of the person who receives the account. The additional tax in subsection (D) does not apply to distribution on death of the taxpayer or the surviving spouse.

ARTICLE 13.

NONRESIDENT AND PART-YEAR RESIDENT INDIVIDUALS

SECTION 12-6-1710. Taxation of part-year resident.

An individual who is a part-year resident of South Carolina may:

(1) report and compute South Carolina tax as if the individual was a resident for the entire year and use the credit provided in Section 12-6-3400; or

(2) report and compute South Carolina tax as a nonresident individual as provided in Section 12-6-1720, except that for purposes of this computation, South Carolina taxable income for that period during which the individual was a resident includes all items of income, gain, loss, or deductions that a resident would be required to include under Section 12-6-560.

SECTION 12-6-1720. Taxable income of nonresident individual, trust, estate, or beneficiary; modifications, adjustments, and allocations.

A nonresident individual, a nonresident trust, a nonresident estate, and a nonresident beneficiary shall report and compute South Carolina taxable income as a resident taxpayer of this State subject to the following modifications:

(1) South Carolina taxable income, gains, losses, or deductions include only amounts attributable to:

(a) the ownership of any interest in real or tangible personal property located in this State;

(b) a business, trade, profession, or occupation carried on in this State or compensation for services performed in this State. If a business, trade, profession, or occupation is carried on or compensation is for services performed partly within and partly without this State, the amount allocable or apportionable to this State under Article 17 of this chapter must be included in South Carolina income;

(c) income from intangible personal property, including annuities, dividends, interest, and gains that is derived from property employed in a trade, business, profession, or occupation carried on in this State. For purposes of this item, a taxpayer, other than a dealer holding property primarily for sale to customers in the ordinary course of the nonresident's trade or business, is not considered to carry on a business, trade, profession, or occupation in South Carolina solely by reason of the purchase and sale of property for the nonresident's own account;

(d) the distributive share of the South Carolina portion of partnership, "S" Corporation, estate, and trust income, gains, losses, and deductions;

(e) lottery or bingo winnings.

(2) The South Carolina taxable income of a nonresident individual, nonresident estate, or nonresident trust must be adjusted as follows:

(a)(i) For a nonresident individual, the personal exemptions and the applicable standard deduction or itemized deductions must be reduced to an amount which is the same proportion as South Carolina adjusted gross income is to federal adjusted gross income.

(ii) For a nonresident estate or nonresident trust, the personal exemption and itemized deductions must be reduced to an amount which is the same proportion as South Carolina gross income is to federal gross income.

(b) For purposes of the computation in item (2)(a), South Carolina adjusted gross income means the adjusted gross income of the ta