South Carolina State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in South Carolina, with full citations and the original source on every page.
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Did RR 96-1 continue the full disability-retirement income exclusion after benefits converted to a regular retirement plan?
No. Once benefits changed from a disability retirement plan to a regular retirement plan—whether the change was mandatory or optional—the full disability-retirement exclusion no longer applied. The re…
Could a South Carolina taxpayer amend a return to change the historical retirement-income deduction election under RR 95-15?
Sometimes. RR 95-15 treated the election to defer deductions until the applicable retirement age for a later $10,000 annual deduction as irrevocable. A taxpayer who chose the $3,000 annual deduction c…
How did PLR 95-9 apportion trademark royalties earned by a South Carolina licensing subsidiary?
The addressed subsidiary used the historical gross-receipts formula. Its numerator included royalties from the licensee's sales delivered to customers in South Carolina, and its denominator included r…
What South Carolina income, sales, and deed-tax consequences did RR 95-9 assign to a partnership's conversion into an LLC?
For a conversion with the same owners, ownership shares, and business, RR 95-9 treated the LLC as a continuation of the partnership. The partnership did not terminate or close its tax year, no new tax…
How did PLR 95-7 apportion trademark royalties and the corporate license fee for a South Carolina licensing subsidiary?
The addressed licensing subsidiary used a gross-receipts ratio: its South Carolina numerator included royalties from licensees' sales delivered to customers in South Carolina, while the denominator in…
How did PLR 95-5 apply South Carolina's historical job credits and job development fee to a new multi-county industrial-park facility?
For the addressed project, 1995 was the first job-credit year because permanent staff began operating the facility then. The company qualified for a historical $1,500 annual credit per new full-time j…
Could an S corporation earn South Carolina's historical job tax credit and use the carryforward after converting to a C corporation under PLR 95-3?
Yes, for the addressed taxpayer if all statutory requirements were met. The Department treated the S corporation as 'subject to' corporate tax even when it had no ordinary corporate-level liability. I…
Was a nonresident investment partnership's intangible income South Carolina-source income to its nonresident limited partners under PLR 95-2?
No, on the stated facts. The nonresident partnership pooled investments and bought and sold stocks, securities, intangibles, and partnership interests solely for its own account. It gave no financial …
Did PLR 94-9 require an entertainment facility to withhold tax from payments to nonresident performers?
Yes, when a temporary nonresident licensee's payment exceeded or was expected to exceed $10,000 in a calendar year. The facility controlled ticket receipts and paid the settlement balance, so the ruli…
Did three South Carolina aircraft landings create 1993 income-tax nexus for the out-of-state lessor in PLR 94-8?
No, on the complete 1993 facts. ABC had no South Carolina property base, employees, accounts, registration, or other business activity, and its leased aircraft made only three landings. The ruling war…
How did RR 94-9 apply South Carolina's historical retirement-income deduction to a surviving spouse?
A surviving spouse generally stepped into the deceased spouse's deduction election for inherited retirement income and could also claim a separate deduction for the survivor's own retirement income. I…
Did PLR 94-5 preserve job-tax credits when new employees moved from a leased plant to a permanent plant in the same industrial park?
Yes, on the stated facts. The jobs qualified for a $1,000 regular credit plus a $500 multi-county-industrial-park credit for years two through six, provided every other statutory requirement was met. …
How did South Carolina PLR 93-8 tax a mutual fund's exempt-interest dividends, capital-gain dividends, and insured defaulted-bond interest?
Qualifying exempt-interest dividends attributable to South Carolina, U.S., or listed territorial obligations were exempt, including qualifying insured matured interest. Capital-gain dividends remained…
How did South Carolina Revenue Ruling 93-12 calculate the historical retirement-income deduction for a surviving spouse?
A surviving spouse could claim one deduction for the survivor's own retirement income and a separate deduction for income attributable to the deceased spouse. For the inherited stream, the survivor ge…
Did South Carolina PLR 93-3 require a petroleum-hauling coordinator that leased trucks and used independent drivers to apportion income as a motor carrier?
Yes. Although independent contractors owned and drove the trucks, APC leased them, solicited and coordinated hauling, insured the vehicles, and billed customers, so it was a motor carrier required to …
What property counted as inventory under SC Revenue Ruling 91-7's historical business-inventory property-tax exemption?
Inventory meant merchandise purchased and held for resale. The property's purpose when bought and held controlled—not the fact that it might later be sold. Equipment primarily rented to customers and …
What qualified as a written contract of sale under SC Revenue Ruling 91-1's historical 1987 long-term-capital-gain transition rule?
A qualifying contract had to become legally binding between January 1 and June 22, 1987, identify the parties, describe the property, state the consideration, and require the seller to convey title. O…
What does SC Private Letter Ruling #89-5 conclude about a long-term capital-gains refund and estimated income tax?
One-half of the refundable credit for 1987 capital gains could be used when calculating the taxpayer's 1989 estimated South Carolina income tax. That half was taken on line 7 of the 1989 estimated-tax…
Was a 1987 IRA withdrawal fully taxable in South Carolina when another state had denied deductions for the original contributions?
Yes. South Carolina included the full IRA withdrawal because it was fully taxable on the taxpayer's federal return and the state's historical statutes provided no IRA-specific modification. The fact t…
Which affiliated company could count jobs created for a transferred production line under South Carolina Private Letter Ruling 89-1?
XYZ could include the new full-time jobs in its historical new-job tax-credit calculation. Although the jobs supported ABC's production line, XYZ hired and controlled the workers and treated them as i…
Did corporations filing a South Carolina consolidated return have to compute each company's South Carolina net income separately?
Yes. Following Emerson Electric Co. v. Wasson, RR 88-10 required each corporation in a South Carolina consolidated return to compute its own South Carolina net income using its own apportionment ratio…
Could affiliated corporations elect a South Carolina consolidated return, defer gain on an intercompany asset sale, and use one group apportionment formula?
The affiliated companies could elect a consolidated return if they met the control and filing requirements, but South Carolina recognized gain on the intercompany asset sale because it had not adopted…
Did a South Carolina resident owe state income tax on operating-income distributions from a Tennessee S corporation, and could she deduct interest paid to buy the stock?
Generally no on the operating income, and no on the interest deduction. The Tennessee S corporation's income was not taxable in South Carolina except for listed categories such as salary, dividends, i…
If I moved into South Carolina partway through the year, can I deduct my full moving expenses on my South Carolina return, or must I prorate them?
You may allocate the full deduction to South Carolina. In Revenue Ruling 88-4 the South Carolina Tax Commission held that a part-year resident who moves INTO the state may allocate — not apportion — t…
In a pre-need funeral (burial) contract where money is held in trust, who owes income tax on the interest the account earns — the customer or the trust?
The customer. In Revenue Ruling 88-3 the South Carolina Tax Commission held that where a pre-need burial (funeral) contract holds the customer's money in a revocable trust, the customer — as the grant…
Could a part-year resident moving into South Carolina allocate the full allowable moving-expense deduction to South Carolina instead of apportioning it?
Yes. A part-year resident moving into South Carolina could allocate the full allowable moving-expense itemized deduction to South Carolina to match the related reimbursement included in South Carolina…
Who had to report the annual income earned in a revocable pre-need funeral trust: the funeral-home trustee or the customer and beneficiary?
The customer. Because each customer could revoke the pre-need contract and recover the account balance and accruals, the customer was treated as the trust owner for income-tax purposes and had to incl…
Would South Carolina waive the estimated-tax underpayment penalty caused by the 1987 increase in the required prepayment from 70% to 90%?
Yes — as one-time transitional relief. In Revenue Ruling 88-1 the South Carolina Tax Commission waived the penalty for underpayment of estimated income tax that resulted from a 1987 law (§ 12-54-55) r…
How did South Carolina define 'full-time employee' and 'service related industry' for the new-jobs tax credit?
RR 87-5 presumed a 'full-time employee' works at least 35 hours per week (a lower number allowed if standard for the job or industry), and defined a 'service related industry' as a business that earns…
Did South Carolina tax interest on GNMA securities, and what was the effective date of that position?
GNMA interest remained taxable. RR 87-6 modified RR 87-4 only to clarify its effective date — tax years beginning on or after January 1, 1987 — while keeping the conclusion that interest on GNMA-guara…
Could a South Carolina resident claim a credit for another state's tax on pension income earned through medical services performed in that state?
Yes. The physician's pension was earned through personal services performed in California, so tax paid there on the pension qualified for South Carolina's other-state tax credit. The credit could not …
When were municipal-bond fund dividends exempt from South Carolina income tax for South Carolina shareholders?
A fund series needed at least 50% of its assets in South Carolina-exempt securities to qualify to pay exempt-interest dividends under the ruling. The National Series, with about 10%, failed. A South C…
Was interest on GNMA (Ginnie Mae) mortgage-backed securities exempt from South Carolina income tax as a U.S. obligation?
No. RR 87-4 held that interest from securities guaranteed by the Government National Mortgage Association (Ginnie Mae) was not exempt from South Carolina income tax, because a federal guarantee does n…
Was interest on Puerto Rico bonds taxable to South Carolina residents, whether held directly or received as exempt-interest dividends from a mutual fund?
No, it was exempt. RR 87-3 held that interest on Puerto Rico bonds was exempt from South Carolina income tax under 48 U.S.C. § 745, both when residents held the bonds directly and when it reached them…
Did a South Carolina resident have to report his share of an out-of-state S corporation's income, and could he claim a credit for tax paid to the other state?
Partly. The resident started from federal taxable income (which already included his Subchapter S share), then modified out the S corporation income, losses, and deductions apportioned to the other st…
Did South Carolina waive the estimated-tax underpayment penalty for farmers and fishermen for tax year 2012 (per SC IL #13-2)?
Yes. Following IRS Notice 2013-5, the South Carolina Department of Revenue waived the estimated-tax underpayment penalty for qualifying farmers and fishermen for tax year 2012 if they filed their retu…
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These are official tax letter rulings and advisory opinions issued by South Carolina's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.