SC SCH TC 11R: Recapture of Capital Investment Credit (Revision 2019-08)

Who files this form

Use SC SCH TC 11-R to recapture Capital Investment Credit for qualifying investments placed in service on or after January 1, 2011.

Recapture is required if you dispose of qualified manufacturing and productive equipment property, or remove it from South Carolina, before the end of its applicable recovery period under IRC Section 168(e). You must increase your Income Tax for the current tax year by the unearned portion of the credit claimed in prior years for that property.

For qualifying investments made in an Economic Impact Zone before January 1, 2011, use the 2010 version of the form. If you need to recapture credits for qualifying investments made both before and after that date, use both versions.

What you'll need

Have the following information ready to complete the form:

• Your name and SSN or FEIN. Individual taxpayers must provide their Social Security Number.
• The date each property was placed in service.
• The date each property was disposed of or removed from South Carolina.
• The property's cost or other basis and its class life.
• The applicable credit percentage and amount of credit claimed.
• The number of full months between the placed-in-service date and the disposal or removal date.

How to file

1. Enter the property information in the appropriate class-life column.
2. Multiply line 4 by line 3 to calculate the credit claimed on line 5.
3. Use the recapture percentage worksheet to calculate line 7. Subtract the full months on line 6 from the total months for the property's class life, then divide the result by those total months.
4. Multiply line 7 by line 5 to calculate tentative recapture tax on line 8.
5. Add line 8 across columns A through E. Enter the total on line 9 and increase your Income Tax by that amount.

On your Income Tax return's tax line, indicate: "Includes recapture tax - SCH TC-11R".

• Paper filing: Include this form with your return.
• Electronic filing: Keep a copy of this form with your tax records.

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

Common mistakes

• Using the wrong version: Use the 2010 version for qualifying investments made in an Economic Impact Zone before January 1, 2011. Use both versions when recapturing credits for qualifying investments made before and after that date.
• Leaving off the return notation: The tax line must indicate "Includes recapture tax - SCH TC-11R".
• Not handling the form correctly when filing: Include it with a paper return, or keep a copy with your tax records if filing electronically.
• Omitting an individual's SSN: The form states that individual taxpayers must provide their Social Security Number.
• Missing the original basis adjustment: When claiming the original credit, you must reduce the property's basis by the amount of credit claimed for that property.

Questions people ask

How much of the credit is recaptured?

The calculation assumes the credit is earned equally over the property's useful life. The unearned portion is recaptured and added to your Income Tax for the current tax year.

What credit percentage applies to each property class?

The form lists 0.5% for 3-year property, 1% for 5-year property, 1.5% for 7-year property, 2% for 10-year property, and 2.5% for property with a class life of 15 years or greater.

How many months does the worksheet use for each class life?

It uses 36 months for 3-year property, 60 for 5-year property, 84 for 7-year property, 120 for 10-year property, and 180 for property with a class life of 15 years or greater.

Can I adjust the property's basis when I recapture the credit?

Yes. If you are required to recapture the credit, you may increase the property's basis by the amount of the basis reduction attributed to credit claimed in prior years. The increase occurs in the year of recapture.

Official sources

• https://dor.sc.gov/sites/dor/files/forms/TC11R.pdf