S 0124 General Bill, By Passailaigue, McConnell, Elliott and Reese
 A BILL TO AMEND SECTION 12-6-40, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA,
 1976, RELATING TO DEFINITIONS FOR PURPOSES OF THE SOUTH CAROLINA INCOME TAX
 ACT, SO AS TO UPDATE THE REFERENCE DATE WHEREBY THIS STATE ADOPTS VARIOUS
 PROVISIONS OF THE INTERNAL REVENUE CODE OF 1986; AND TO AMEND SECTION
 12-6-1150, RELATING TO THE DEDUCTIONS ALLOWED FROM SOUTH CAROLINA TAXABLE
 INCOME OF A PORTION OF NET CAPITAL GAIN FOR PURPOSES OF THE SOUTH CAROLINA TAX
 ACT, SO AS TO REVISE THE DEDUCTION TO REFLECT CHANGES IN FEDERAL INCOME TAX
 RATES APPLICABLE TO SUCH GAIN AND TO CONFORM TO FEDERAL LAW THE HOLDING PERIOD
 REQUIRED FOR ELIGIBILITY FOR THE DEDUCTION.

   11/18/98  Senate Prefiled
   11/18/98  Senate Referred to Committee on Finance
   01/12/99  Senate Introduced and read first time SJ-50
   01/12/99  Senate Referred to Committee on Finance SJ-50

TO AMEND SECTION 12-6-40, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO DEFINITIONS FOR PURPOSES OF THE SOUTH CAROLINA INCOME TAX ACT, SO AS TO UPDATE THE REFERENCE DATE WHEREBY THIS STATE ADOPTS VARIOUS PROVISIONS OF THE INTERNAL REVENUE CODE OF 1986; AND TO AMEND SECTION 12-6-1150, RELATING TO THE DEDUCTIONS ALLOWED FROM SOUTH CAROLINA TAXABLE INCOME OF A PORTION OF NET CAPITAL GAIN FOR PURPOSES OF THE SOUTH CAROLINA TAX ACT, SO AS TO REVISE THE DEDUCTION TO REFLECT CHANGES IN FEDERAL INCOME TAX RATES APPLICABLE TO SUCH GAIN AND TO CONFORM TO FEDERAL LAW THE HOLDING PERIOD REQUIRED FOR ELIGIBILITY FOR THE DEDUCTION.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. Section 12-6-40(A) of the 1976 Code, as last amended by Act 268 of 1998, is further amended to read:

"(A) `Internal Revenue Code' means the Internal Revenue Code of 1986 as amended through December 31, 1997 1998, and includes the effective date provisions contained therein."

SECTION 2. Section 12-6-1150 of the 1976 Code is amended to read:

"Section 12-6-1150. (A) Individuals, estates, and trusts are allowed a deduction from South Carolina taxable income equal to twenty-nine percent the following percentage of net capital gain:

Net capital gain subject to a

maximum federal income tax rate of: Net capital gain deducted:

(1) 28 percent 30 percent

(2) 25 percent 37 percent

(3) 20 percent 50 percent

(4) 10 percent 50 percent

(5) 18 percent 55 percent

(6) 8 percent 55 percent

recognized in this State during taxable years beginning in 1991, 1992, 1993, or 1994 and forty-four percent for taxable years beginning after 1994. 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 defined in has the same meaning as it has for section 1(h) of the Internal Revenue Code, as amended through December 31, 1988, except that the required holding period is two or more years.

(3) The maximum federal income tax rate applicable to net capital gain are the rates provided under section 1(h) of the Internal Revenue Code."

SECTION 3. Upon approval of the Governor, this act is effective for tax years beginning after 1998.