SC SCH TC 11: Capital Investment Credit (Revision 2022-04)

Who files this form

Use SC SCH.TC11 to claim the Capital Investment Credit for qualified investments in manufacturing and productive equipment property made in South Carolina beginning January 1, 2011. The credit is allowed against Income Tax for the tax year in which you place qualifying property in service in South Carolina.

Qualified property must:

• Be used as an integral part of manufacturing, production, extraction, or furnishing transportation, communications, electrical energy, gas, water, or sewage disposal services in South Carolina.
• Be tangible property to which IRC Section 168 applies and Section 1245 property as defined in IRC Section 1245(a)(3).
• Have been constructed, reconstructed, or erected by you in South Carolina, or acquired by you with its original use beginning in the state.

Certain software used to control or monitor manufacturing or production in South Carolina also qualifies.

What you'll need

Have the information needed to complete the form:

• Your name, SSN or FEIN, and county. Individual taxpayers must provide their SSN.
• The name and FEIN of any pass-through entity from which you received the credit.
• The basis of qualified property, grouped by its recovery period under IRC Section 168(e).
• Unused credits available to carry forward.

Utility companies subject to the License Fee under SC Code Section 12-20-100 also need prior-year Capital Investment Credit and Economic Impact Zone Credit amounts used for investments made after June 30, 1998, to complete the Line 9 Worksheet.

How to file

• Paper filing: Attach SC SCH.TC11 to your Income Tax return.
• Electronic filing: Keep a copy with your tax records.

Forms are available at dor.sc.gov/forms.

Common mistakes

• Using the wrong version for older investments: Use the 2010 version for qualifying investments made in an Economic Impact Zone before January 1, 2011.
• Claiming overlapping credits: This credit does not apply to property to which other tax credits would apply unless you choose to waive those other credits for the property.
• Forgetting the basis adjustment: For South Carolina Income Tax purposes, reduce the property's basis by the credit claimed for it.
• Overlooking recapture: Disposing of qualifying property or removing it from South Carolina before its recovery period ends requires recapture of the unearned portion of the credit. Use TC-11R to calculate the amount to add to your Income Tax liability.
• Leaving out an individual's SSN: Providing an SSN is mandatory for individual taxpayers.

Questions people ask

How much is the credit?

Multiply the total basis of qualified property in each recovery-period group by its credit percentage: 0.5% for 3-year property, 1.0% for 5-year property, 1.5% for 7-year property, 2.0% for 10-year property, and 2.5% for property with a recovery period of 15 years or greater. Use IRC Section 168(e) to determine the recovery period.

Can unused credit be carried forward?

Unused credit may be carried forward for 10 years from the close of the tax year in which it was earned.

Can computer software qualify?

Yes. Software used to control or monitor a manufacturing or production process in South Carolina is treated as qualified property if depreciation or amortization is allowable.

Is there a special limit for entities subject to the utility License Fee?

Yes. An entity subject to the License Fee under SC Code Section 12-20-100 is limited to $5 million in credit for investments made after June 30, 1998. Utility companies subject to that fee must complete the Line 9 Worksheet, which accounts for Capital Investment Credits and Economic Impact Zone Credits used in prior years.

Official sources

• https://dor.sc.gov/sites/dor/files/forms/TC11.pdf