Bill 1043

                    Current Status

Bill Number:               1043
Ratification Number:       466
Act Number:                422
Introducing Body:          Senate
Subject:                   Relating respectively to definitions and
                           net income with respect to the tax on building
                           and loan associations

(A422, R466, S1043)

AN ACT TO AMEND SECTIONS 12-13-10 AND 12-13-20, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING RESPECTIVELY TO DEFINITIONS AND NET INCOME WITH RESPECT TO THE TAX ON BUILDING AND LOAN ASSOCIATIONS, SO AS TO UPDATE THE DEFINITION AND PROVIDE FOR A BAD DEBT DEDUCTION EQUAL TO THE BAD DEBT DEDUCTION ALLOWED PURSUANT TO THE INTERNAL REVENUE CODE AND TO PRESCRIBE TRANSITION PROCEDURES.

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

Definition

SECTION 1. Section 12-13-10 of the 1976 Code is amended to read:

"Section 12-13-10. For the purpose of this chapter, the word 'association' includes any mutual or stock-chartered corporation insured by the Federal Savings and Loan Insurance Corporation or any corporation subject to regulatory supervision by the Federal Home Loan Bank or the Savings and Loan Division of the State Board of Financial Institutions. Such banks as are taxable under the provisions of Sections 12-11-10 to 12-11-60 are not included."

Definition

SECTION 2. Section 12-13-20 of the 1976 Code is amended to read:

"Section 12-13-20. The term 'net income', as used in this chapter, means taxable income as determined for a regular corporation in Chapter 7 of this title after deducting all earnings accrued, paid, credited, or set aside for the benefit of holders of savings or investment accounts, any additions to reserves which are required by law, regulation, or direction of appropriate supervisory agencies, and a bad debt deduction. The bad debt deduction allowable for South Carolina income tax purposes is the amount determined under the Internal Revenue Code and the applicable regulations as amended through December 31, 1985. No deductions from income are allowed for any additions to undivided profits or surplus accounts other than herein required, and for the purposes of this chapter, a state-organized association is allowed the same deductions for bad debt reserves as those allowed to federally organized associations. Associations shall maintain the bad debt reserves allowed as a deduction pursuant to this section in accordance with the provisions of the Internal Revenue Code as amended through December 31, 1985, and shall keep a permanent record. These provisions are controlling notwithstanding any other provision of law."

Bad debt reserve

SECTION 3. The beginning balance for an association's bad debt reserve on January 1, 1986, shall equal its reserve for bad debts as of December 31, 1985. Any amount set aside as bad debt reserve prior to 1986 in accordance with Section 12-13-20 of the 1976 Code may not be included in South Carolina taxable income of an association as a result of the change in the method in which the bad debt reserve is computed as provided in Section 2 of this act.

Provisions controlling

SECTION 4. These provisions are controlling notwithstanding any other provision of South Carolina law.

Provisions effective

SECTION 5. The provisions of this act are effective for tax years beginning after December 31, 1985.

Time effective

SECTION 6. This act shall take effect upon approval by the Governor.