Current Status Bill Number:138 Type of Legislation:General Bill GB Introducing Body:Senate Introduced Date:19950110 Primary Sponsor:Passailaigue All Sponsors:Passailaigue, Leventis, Rose, Wilson, Rankin, Elliott Drafted Document Number:RES9412.ELP Residing Body:Senate Current Committee:Finance Committee 06 SF Subject:Income, taxable; Presidentially declared disasters
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
Senate 19950110 Introduced, read first time, 06 SF
referred to Committee
Senate 19941003 Prefiled, referred to Committee 06 SF
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TO AMEND SECTION 12-7-430 OF THE CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO ADJUSTMENTS TO FEDERAL GROSS, ADJUSTED GROSS, AND TAXABLE INCOME, SO AS TO PROVIDE THAT NO GAIN SHALL BE RECOGNIZED ON CERTAIN INVOLUNTARY CONVERSIONS OF PROPERTY DUE TO PRESIDENTIALLY DECLARED DISASTERS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 12-7-430 of the 1976 Code, as last amended by Act 497 of 1994, is further amended to read:
"Section 12-7-430. The South Carolina taxable income of individuals, estates, trusts, partnerships, and corporations is modified as provided in this section.
(a) The gross income of a taxpayer is determined without application of Internal Revenue Code Sections 78, 86, and 87.
(b) The determination of gross income as provided in the following Internal Revenue Code Sections is made with the following modifications:
(1) The exclusion from gross income authorized by Internal Revenue Code Section 103 is modified to exempt only interest upon obligations of this State, any of its political subdivisions, and to exempt interest upon obligations of the United States.
(2) In any and all Internal Revenue Code Sections that make reference to Internal Revenue Code Section 103, the modification provided in subitem (1) of item (b) of this section similarly applies.
(3) If a taxpayer has included a state income tax refund in federal gross income, South Carolina gross income is computed without regard to such state income tax refund.
(4) No exclusion from gross income is permitted for South Carolina income tax purposes as permitted by Internal Revenue Code Sections 912 and 931 through 936.
(5) No exclusion from gross income is permitted for South Carolina income tax purposes as permitted by Internal Revenue Code Section 1031 for the sale or exchange of real estate located in this State unless the real estate received in an exchange is located in this State.
(6) The amounts by which the taxpayer's mortgage interest deduction for federal income tax purposes was reduced pursuant to Section 163(g) of the Internal Revenue Code of 1986 must be restored.
(7) Notwithstanding the provisions of Internal Revenue Code Section 1033, if the taxpayer's principal residence or any of its contents is compulsorily or involuntarily converted as a result of a Presidentially declared disaster, then:
(A) no gain shall be recognized by reason of the receipt of any insurance proceeds for personal property which was part of such contents and which was not scheduled property for purposes of such insurance;
(B) in the case of any insurance proceeds (not described in subitem (1)) for such residence or contents:
(i) such proceeds shall be treated as received for the conversion of a single item of property; and
(ii) any property which is similar or related in service or use to the residence so converted (or contents thereof) shall be treated for purposes of Internal Revenue Code Section 1033(a)(2) as property similar or related in service or use to such single item of property.
(C) Internal Revenue Code Section 1033(a)(2)(B) shall be applied with respect to any property so converted by substituting `4 years' for `2 years'.
(D) For purposes of this subsection, the term `Presidentially declared disaster' shall mean any disaster which, with respect to the area in which the residence is located, resulted in a subsequent determination by the President that such area warrants assistance by the Federal Government under the Disaster Relief and Emergency Assistance Act.
(E) For purposes of this subsection, the term `principal residence' has the same meaning as when used in Internal Revenue Code Section 1034, except that no ownership requirement shall be imposed.
(c) Adjusted gross income and taxable income are computed without the deductions authorized by Internal Revenue Code Section 196.
(d) The deductions used in computing adjusted gross income and taxable income are modified as follows:
(1) The deduction permitted by Internal Revenue Code Section 164 must be computed in the same manner except there is no deduction for state and local income taxes, or state and local franchise taxes measured by net income, or any income taxes, or any taxes measured by or with respect to net income.
(2) Any net operating loss deduction is computed in accordance with Internal Revenue Code Section 172, except that all items of income and deductions used in computing the net operating loss deduction are adjusted as provided in this section and in Section 12-7-435 and no carrybacks are allowed.
(3) For purposes of computing the depletion deduction pursuant to Internal Revenue Code Section 611 through 613, a taxpayer who allocates or apportions income under the provisions of Article 9 of this chapter has the option of adjusting taxable income to eliminate the allowance for depletion otherwise allowable, and to deduct as an allowance for depletion from South Carolina taxable income subject to tax after allocation and apportionment depletion computed in accordance with Internal Revenue Code Sections 611 through 613 with respect to mines, oil and gas wells, and other natural deposits located in this State, except that the allowance may not exceed fifty percent of the net income apportioned to South Carolina by Sections 12-7-1140 through 12-7-1190.
(4) The disallowance of deductions required by Internal Revenue Code Section 265 shall apply for South Carolina income tax purposes if the related income is exempt for South Carolina income tax purposes, whether or not the income is exempt for federal purposes.
(5) The limiting provisions of Internal Revenue Code Section 280C are not applied.
(6) For purposes of computing the deduction allowed by Internal Revenue Code Section 691(c) the term `estate tax' means the taxes imposed under Chapter 15 of Title 12 including any South Carolina generation-skipping transfer tax.
(7) If for federal income tax purposes a taxpayer claims a credit for which Internal Revenue Code Section 48(q) requires a reduction of basis, the taxpayer may reduce his South Carolina taxable income by the amount of the reduction in basis in the tax year in which basis is so reduced for federal income tax purposes. If a taxpayer makes an election pursuant to Internal Revenue Code Section 48(q)(4) to reduce the credit and not the basis, this subitem does not apply.
(8) A corporation that has a net capital loss for a tax year may not carry back the loss to a prior tax year as permitted by Internal Revenue Code Section 1212(a), but it may carry forward the net capital loss to future years to the extent provided in Internal Revenue Code Section 1212(a).
(e) If the income of a taxpayer is subject to allocation or apportionment, or both, pursuant to Article 9 of this chapter then South Carolina taxable income is modified as provided in that article.
(f) 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 or any comparable provisions.
(g) South Carolina gross income does not include gross income excluded from federal income tax by reason of any treaty of the United States.
(h) South Carolina taxable income does not include income of an organization exempt from income tax pursuant to Internal Revenue Code Section 501.
(i) Notwithstanding Section 12 of Act 101 of 1985, Internal Revenue Code 7518 applies retroactively to taxable years beginning after 1986 and applies to any taxpayer."
SECTION 2. This act takes effect upon approval by the Governor.