South Carolina R&D Tax Credit Summary

SOUTH CAROLINA R&D TAX CREDIT SUMMARY

South Carolina State R&D Tax Credits

A tax credit is allowed for qualified research expenses as well as qualified contributions to the Industry Partnership Fund.

South Carolina State Qualified Research Expense Tax Credit

Taxpayers who claim a tax credit on their federal income tax for increasing research activities under IRC §41 are allowed a credit against corporate income tax equal to 5% of qualified research expenses made in South Carolina
The credit is limited to 50% of the tax liability remaining after all other credits have been applied

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Refundable/Transferable Tax Credit – No

Carryforward

Unused credits can be carried forward for up to ten years.

Credit for Qualified Contributions to Industry Partnership Fund

For taxable years beginning on or after January 1, 2006, taxpayers may claim a credit against the corporate income tax equal to 100% of a qualified contribution to the Industry Partnership Fund at the South Carolina Research Authority (SCRA) or an SCRA-designated affiliate
A contribution is not a qualified contribution if it is subject to conditions or limitations regarding the use of the contribution
In the tax year 2007, the maximum credit for an individual taxpayer increases to $1.3 million, and the aggregate credit limit rises to $4 million. For subsequent tax years, the maximum credit for an individual taxpayer is $2 million, and the aggregate credit claimed by all taxpayers is limited to $6 million. Taxpayers who have made contributions that are intended to be qualified contributions earlier in the applicable tax year are given priority entitlement to the credit over other taxpayers

How to Obtain the Credit?

Taxpayers must retain a form provided by the SCRA identifying the taxpayers, the year, and the amount of credit; the Department of Revenue may require that a copy of this form be attached to the taxpayer’s return or otherwise be provided to the Department. Taxpayers who claim the credit may not take a deduction in relation to the qualified contribution which gives rise to the credit.

Refundable/Transferable Tax Credit – No

Carryforward

The credit is nonrefundable, and unused credits may be carried forward up to 10 years. The merger, consolidation, or reorganization of a corporation where tax attributes survive does not create new eligibility in a succeeding corporation, but unused credits may be transferred and continued by the succeeding corporation. A corporation or partnership may also assign its rights to its unused credit to another corporation or partnership if it transfers all, or substantially all, of its assets or the assets of its trade or business or operating division to another corporation or partnership.

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South Carolina R&D Tax Credit Summary