South Carolina Code 12-6-3310. Tax credits; timeframe for use; pass through and calculation of shareholder credit; limited liability companies
(B)(1) Unless specifically prohibited, an "S" corporation, limited liability company taxed as a partnership, or partnership that qualifies for a credit pursuant to this article may pass through the credit earned to each shareholder of the "S" corporation, member of the limited liability company, or partner of the partnership.
Terms Used In South Carolina Code 12-6-3310
- Business: includes trade, profession, occupation, or employment. See South Carolina Code 12-6-30
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- individual: means a human being. See South Carolina Code 12-2-20
- partnership: includes a limited liability company taxed for South Carolina income tax purposes as a partnership;
(2) "partner" includes a member of a limited liability company taxed for South Carolina income tax purposes as a partnership;
(3) "corporation" includes a limited liability company or professional or other association taxed for South Carolina income tax purposes as a corporation; and
(4) "shareholder" includes a member of a limited liability company taxed for South Carolina income tax purposes as a corporation. See South Carolina Code 12-2-25 - Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Taxpayer: includes an individual, trust, estate, partnership, association, company, corporation, or any other entity subject to the tax imposed by this chapter or required to file a return. See South Carolina Code 12-6-30
(2) A credit earned by an "S" corporation owing corporate level income tax must first be used at the entity level. Only the remaining credit passes through to the shareholders of the "S" corporation.
(3) The amount of the credit allowed a shareholder, partner, or member is equal to the percentage of the shareholder’s stock ownership, partner’s interest in the partnership, or member’s interest in the limited liability company for the taxable year multiplied by the amount of the credit earned by the entity and available for pass through. Limitations upon reduction of income tax liability by use of a credit are computed based on the shareholder’s, partner’s, or member’s tax liability. The credit is allowed against the type of tax or taxes specifically provided by the credit in this article.
(C) A limited liability company not organized as a legal entity which is a taxpayer, a corporation, or other form of business entity expressly specified as qualifying for the credits allowed pursuant to this article nevertheless qualifies for such credits in a manner consistent with § 12-2-25 as follows:
(1) Limited liability companies taxed for South Carolina income tax purposes as partnerships shall apply the credits as provided in subsection (B). If a member is an individual, the limited liability company may earn and pass through any credits allowed by this article to be applied against income tax imposed pursuant to § 12-6-510. If a member is a corporation, the limited liability company may earn and pass through any credits allowed by this article to be applied against income tax imposed pursuant to § 12-6-530.
(2) Limited liability companies taxed for South Carolina income tax purposes as corporations are entitled to all credits otherwise applicable to corporations.
(3) With respect to single members of limited liability companies which are not regarded as a separate entity from its owner, members who are individuals may claim any credits allowed by this article to be applied against income tax imposed pursuant to § 12-6-510 and members which are corporations may claim any credits allowed by this article to be applied against income tax imposed pursuant to § 12-6-530.
(4) For limited liability companies owned by limited liability companies or other pass through entities described in subsection (B), items (1) through (3) are applied at each successive stage of ownership until the credit is applied against the tax imposed pursuant to either § 12-6-510 or § 12-6-530, as applicable.