A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ADDING SECTION 12-6-1155 SO AS TO ALLOW A DEDUCTION FOR A FARMER WHO SELLS OR LEASES FARMLAND TO A BEGINNING FARMER OR ENTERS INTO A CROP-SHARE AGREEMENT WITH AN EXISTING FARMER, AND TO SET FORTH THE LIMITATIONS ON THE DEDUCTION.

 

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

 

SECTION 1.  Article 9, Chapter 6, Title 12 of the S.C. Code is amended by adding:

 

    Section 12-6-1155. (A)(1) A taxpayer who is a farm owner who sells all or a portion of such farmland to a beginning farmer is allowed a deduction from South Carolina taxable income equal to the amount of capital gains received from the sale in the tax year. The deduction is limited by the amounts set forth in item (2) and only to the extent the capital gains were included in federal adjusted gross income for the tax year.

       (2) A taxpayer is allowed a deduction equal to:

           (a) one hundred percent for the first two million dollars of capital gains;

           (b) eighty percent for the next one million dollars of capital gains;

           (c) sixty percent for the next one million dollars of capital gains;

           (d) forty percent for the next one million dollars of capital gains; and

           (e) twenty percent for the next one million dollars of capital gains.

    (B) A taxpayer who is a farm owner who enters a lease or rental agreement for all or a portion of such farmland with a beginning farmer is allowed a deduction from South Carolina taxable income equal to the amount of cash-rent income received from the lease or rental, but not to exceed twenty-five thousand dollars, and only to the extent the income was included in federal adjusted gross income for the tax year.

    (C) A taxpayer who is a farm owner who enters a crop-share arrangement on all or a portion of such farmland with a beginning farmer is allowed a deduction from South Carolina taxable income equal to the amount of income received from the arrangement, but not to exceed twenty-five thousand dollars, and only to the extent the income was included in federal adjusted gross income for the tax year.

    (D) The Department of Agriculture shall assist the Department in Revenue in determining eligibility and the amount of the deduction. Each agency may adopt rules and promulgate regulations necessary to implement the provisions of this section.

    (E) For purposes of this section:

       (1) "Beginning farmer" means a taxpayer who:

           (a) has filed at least one but not more than ten Internal Revenue Service Schedule F (Form 1040) Profit or Loss From Farming forms since turning eighteen years of age;

           (b) is approved for a beginning farmer loan through the United States Department of Agriculture Farm Service Agency Beginning Farmer direct or guaranteed loan program;

           (c) has a farming operation that is determined by the South Carolina Department of Agriculture to be new production agriculture but is the principal operator of a farm and has substantial farming knowledge; or

           (d) has been determined by the South Carolina Department of Agriculture to be a qualified family member.

       (2) "Farm owner" means an individual who owns farmland held in a conservation easement and disposes of, or relinquishes use of, all or some portion of such farmland by:

           (a) a sale to a beginning farmer;

           (b) a lease or rental agreement not exceeding ten years with a beginning farmer; or

           (c) a crop-share agreement not exceeding ten years with a beginning farmer.

       (3) "Qualified family member" means an individual who is related to a farm owner within the fourth degree by blood, marriage, or adoption and who is purchasing or leasing or is in a crop-share arrangement for land from all or a portion of such farm owner's farming operation.

 

SECTION 2.  This act takes effect upon approval by the Governor and first applies to sales, leases, and agreements made for tax years beginning after 2025.

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