2017 South Carolina Code of Laws
Title 12 - Taxation
CHAPTER 6 - SOUTH CAROLINA INCOME TAX ACT
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, 2016, 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.

(c) If Internal Revenue Code sections adopted by this State which expired or portions thereof expired on December 31, 2016, are extended, but otherwise not amended, by congressional enactment during 2017, these sections or portions thereof also are extended for South Carolina income tax purposes in the same manner that they are extended for federal income tax purposes.

(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.

HISTORY: 1995 Act No. 76, Section 1; 1996 Act No. 410, Section 1; 1997 Act No. 155, Part II, Section 10A; 1998 Act No. 268, Section 1; 1999 Act No. 114, Section 3; 2000 Act No. 387, Part II, Section 7, eff June 30, 2000; 2001 Act No. 89, Section 6, eff July 20, 2001, applicable to taxable years beginning after December 31, 2000; 2002 Act No. 220, Section 1, eff April 22, 2002; 2003 Act No. 69, Section 3.E.1, eff June 18, 2003; 2005 Act No. 145, Section 7, eff June 7, 2005; 2006 Act No. 386, Section 4, eff June 14, 2006; 2007 Act No. 9, Section 2, eff April 11, 2007, applicable to county designations beginning in 2007; 2007 Act No. 110, Sections 9, 37, eff June 21, 2007; 2007 Act No. 116, Sections 15, 43, eff June 28, 2007, applicable for tax years beginning after 2007; 2008 Act No. 311, Section 54, eff June 4, 2008; 2009 Act No. 16, Section 1, eff May 7, 2009; 2010 Act No. 142, Section 1, eff March 31, 2010; 2011 Act No. 5, Section 1, eff April 12, 2011; 2012 Act No. 126, Sections 1, 2, eff March 13, 2012; 2013 Act No. 10, Sections 1, 2, eff April 9, 2013; 2014 Act No. 126 (S.953), Section 1, eff March 4, 2014; 2015 Act No. 5 (S.397), Section 1, eff March 27, 2015; 2016 Act No. 160 (H.4328), Section 3, eff April 21, 2016; 2017 Act No. 4 (S.250), Section 1, eff April 5, 2017.

Editor's Note

2005 Act No. 145, Section 42, provides as follows:

"Notwithstanding the ratification of another act during the 2004-2005 Session of the General Assembly affecting the sections of the 1976 Code amended in Sections 7, 8, 9, and 10 of this act, the ratification of this act is deemed to be the last action of the General Assembly regarding those code sections."

2007 Act No. 9, Section 3.B, provides as follows:

This section takes effect upon approval by the Governor and only for the purpose of locking into the 2006 classification.

Effect of Amendment

The 2013 amendment, in subsection (A)(1)(a), substituted "January 2, 2013" for "December 31, 2011"; and deleted former subsection (A)(1)(c), relating to Internal Revenue Code sections adopted by the state which expired on December 31, 2011, or January 1, 2012.

2014 Act No. 126, Section 1, in subsection (A)(1)(a), substituted "December 31, 2013" for "January 2, 2013"; made nonsubstantive changes in subsection (A)(1)(b); and added subsection (A)(1)(c), relating to extension.

2015 Act No. 5, Section 1, in (A)(1)(a) and (A)(1)(c), substituted "December 31, 2014" for "December 31, 2013"; and in (A)(1)(c) substituted "by congressional enactment during 2015" for "by congressional enactment during 2014".

2016 Act No. 160, Section 3, in (A)(1)(a), substituted "2015" for "2014"; and in (A)(1)(c), substituted "2015" for "2014" and "2016" for "2015".

2017 Act No. 4, Section 1, in (A)(1)(a), substituted "2016" for "2015", and in (A)(1)(c), substituted "2016" for "2015" and "2017" for "2016".