South Carolina Response to Bonus Depreciation

STT, 3/10/03

The South Carolina Department of Revenue has announced in a news release that the state did not adopt the new Internal Revenue Service 30 Percent Bonus Depreciation; taxpayers claiming the depreciation for federal purposes must add back the 30 percent for South Carolina.

FOR IMMEDIATE RELEASE

Feb. 14, 2003
S.C. has not adopted new IRS bonus depreciation

[1] The South Carolina Department of Revenue has received a number of phone calls from taxpayers regarding the new Internal Revenue Service 30% Bonus Depreciation. Some taxpayers have claimed the depreciation on their property and income tax returns filed with the Department of Revenue. South Carolina has not adopted the bonus depreciation.

[2] While South Carolina has conformed to federal income tax laws enacted through Dec. 31, 2001, the Bonus Depreciation of 30% was not enacted until March 2002 and new legislation would be required to adopt it.

[3] Taxpayers who claimed the depreciation on income tax returns for federal purposes must add back the 30% for South Carolina reporting on SC1040, line 38. If the South Carolina General Assembly adopts the bonus depreciation during this year's session, taxpayers will have to file an amended return to claim the depreciation.

CCH, 2/26/03

The South Carolina Department of Revenue advises taxpayers that South Carolina has not adopted the 30% federal bonus depreciation deduction allowed by the federal Job Creation and Worker Assistance Act (JCWAA) (P.L. 107-146) for South Carolina personal or corporate income tax purposes. Currently, South Carolina conforms with the Internal Revenue Code as amended though December 31, 2001. Because the bonus depreciation deduction was not enacted until March 2002, new legislation would be required to adopt it. Taxpayers that claim the bonus depreciation deduction on their federal returns must add back the 30% deduction on line 38 of form SC1040. If the General Assembly adopts the bonus depreciation during this year's session, taxpayers will have to file amended returns to claim the deduction. (News Release, South Carolina Department of Revenue, February 21, 2003.)

BNA, 6/18/02:

South Carolina
New State-Federal Conformity Law Omits Federal Job Creation, Worker Assistance Act
South Carolina legislation (H.B. 4695) updating Internal Revenue Code references did not "pick up" the federal Job Creation and Worker Assistance Act of 2002 (Pub. L. No. 107-147), a Department of Revenue spokesman told BNA June 4.

For South Carolina income tax purposes, under the law enacted April 22, references to the Internal Revenue Code mean the federal code of 1986 as amended through Dec. 31, 2001, the legislation said.

"This means we did not pick up the federal act yet," said Rick Handel, chief counsel for policy at the Department of Revenue. The General Assembly may adopt the federal act in 2003, Handel said, depending in part upon the actions of the Board of Economic Advisors.

If the General Assembly adopts the federal act in 2003 without a special provision, federal changes, such as the bonus depreciation provision, will apply retroactively, Handel noted.

The legislation took effect April 22.

Text of the measure is available on the World Wide Web at http://www.scstatehouse.net/bills/4695.htm.