South Carolina General Assembly
103rd Session, 1979-1980

Bill 718


                    Current Status

Bill Number:               718
Ratification Number:       374
Act Number                 343
Introducing Body:          Senate
Subject:                   Relating to income tax deductions
View additional legislative information at the LPITS web site.


(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

(A343, R374, S718)

AN ACT TO AMEND SECTION 12-7-700, CODE OF LAWS OF SOUTH CAROLINA, 1976, AS AMENDED, RELATING TO INCOME TAX DEDUCTIONS, SO AS TO DELETE ITEMS RELATING TO NET OPERATING LOSS CARRY-OVERS; AND TO AMEND THE CODE BY ADDING SECTION 12-7-705 SO AS TO INCORPORATE THE ITEMS DELETED FROM SECTION 12-7-700 RELATING TO THE NET OPERATING LOSS DEDUCTION INTO A SEPARATE SECTION.

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

Items deleted relating to net operating loss carryover

Section 1. Section 12-7-700 of the 1976 Code, as last amended by Act 143 of 1979, is further amended by striking items (12) and (12A).

Net operating loss carry-over

Section 2. The 1976 Code is amended by adding:

"Section 12-7-705. (1) With respect only to taxpayers who have established a new business or industry in this State during the calendar year 1979 and thereafter, in addition to other deductions allowed by this chapter, there shall be allowed as a deduction a net operating loss carryover under the following conditions:

(a) The net operating loss as defined in this subsection for any year ending on or after December 31, 1979, may be carried forward to the next succeeding taxable year and annually thereafter for a total period of seven years next succeeding the year of operating loss, or until such net operating loss has been exhausted or absorbed by the taxable income of a succeeding year, whichever occurs first. The net operating loss deduction herein allowed shall be allowable only for the first seven years of the operation of such new business or industry in this State.

(b) ln the case of a taxpayer other than a corporation, as used herein the term 'taxable income' or 'net income' shall be deemed to be the net income computed without the deduction of income taxes, personal exemption, and credit for dependents. The net income of the taxable period to which the net operating loss deduction as adjusted is carried shall be the net income before the deduction of income taxes, personal exemption, and credit for dependents, and such income taxes, exemption, and credits shall not be used to increase the net operating loss which may be carried to any other taxable period.

(c) As used in this subsection the term 'net operating loss" is hereby defined as the excess of allowable deductions over gross income for the taxable year arising from the operation of such new business or industry. In the case of a taxpayer other than a corporation, deductions, including personal exemptions and credit for dependents and income taxes, not attributable to the operation of a trade or business shall be eliminated from the deductions otherwise allowable for the taxable year to the extent that they exceed gross income not derived from such trade or business.

(d) The benefits of this subsection shall be available to taxpayers establishing or completing additional industries or businesses within this State with respect to each additional distinctly separate new business or industry, established or completed within this State during the calendar year 1979 and thereafter, whether or not the taxpayer involved has elected under Sections 12-7-1110 to 12-7-1200 to allocate and apportion for income tax purposes income from sources partly within and partly without this State; provided, that the taxpayer so situate shall make an election in writing to the Commission in the first income tax return filed after the establishment or completion of the new facility to report on a separate accounting basis the net income or net loss of such additional distinctly separate businesses or industries; provided, further, that separate accounting for such additional facility shall not be available after the net operating losses provided for by this subsection have been absorbed and applied.

(2) In addition to other deductions allowed by this chapter, there shall be allowed to all taxpayers as a deduction a net operating loss carryover under the following conditions:

(a) The net operating loss as defined in this subsection for any year ending on or after December 31, 1979, may be carried forward to the next succeeding taxable year and annually thereafter for a total period of five years next succeeding the year of such operating loss, or until such net operating loss has been exhausted or absorbed by the taxable income of a succeeding year, whichever occurs first.

(b) In the case of a taxpayer other than a corporation as used in this subsection the term 'taxable income' or 'net income' shall be deemed to be the net income computed without the deduction of income taxes, personal exemption, and credit for dependents. The net income of the taxable period to which the net operating loss deduction' as adjusted is carried shall be the net income before the deductions of income taxes, personal exemption, and credit for dependents,'and such income taxes, exemption, and credits shall not be used to increase the net operating loss which may be carried to any other taxable period.

(c) As used in this subsection the term 'net operating loss' is defined as the excess of allowable deductions over gross income for the taxable year. In the case of a taxpayer other than a corporation, deductions, including personal exemptions and credit for dependents and income taxes, not attributable to the operation of a trade or business shall be eliminated from the deductions otherwise allowable for the taxable year to the extent that they exceed gross income not derived from such trade or business.

(3) Notwithstanding any other provision of law, if the Tax Commission discovers from the examination of the return or otherwise that the income of any taxpayer or any portion thereof has not been assessed with respect to any return in which a net operating loss is sustained,or is claimed as a deduction under this section, in whole or in part, it may at any time within three years from the date the return was filed, which finally absorbs the net operating loss deduction, assess such income and give notice to the taxpayer of such assessment and the taxpayer shall thereupon have an opportunity within thirty days to confer with the Commission as to the proposed assessment. After the expiration of thirty days from such notification the Commission shall assess the income of such taxpayer or any portion thereof which it believes has not theretofore been assessed and shall give notice to the taxpayer so assessed of the amount of the tax and interest and penalty, if any, and the amount thereof shall be due and payable within ten days from the date of such notice. The provisions of this chapter with respect to revision and appeal shall apply to a tax so assessed. The limitation herein provided for shall not apply to the assessment of additional taxes upon fraudulent returns, nor shall it apply to the assessment of taxes with respect to returns not filed in accordance with requirements of law."

Time effective

Section 3. This act shall take effect upon approval by the Governor.