CCH Axcess Tax

Form SC1120 and South Carolina Depreciation

Federal Interview Form Notes and Features

Depreciation

South Carolina has not adopted the 30% or 50% bonus federal depreciation. Effective for tax years after January 1, 2004, South Carolina will confirm with the $100,000 Section 179 deduction, which is the same as the total limit for 2004 for federal. However H.R. 4520 will limit federal Section 179 for SUVs placed in service after H.R. 4520 to $25,000 per SUV. For federal purposes they could still claim up to an additional $75,000 of Section 179 deduction assuming they had placed in service other Section 179 properties. South Carolina does not have the $25,000 SUV limit.

From tax year 1985 until the Federal JCWA was enacted, South Carolina allowed federal depreciation and therefore requires no modification to federal income for assets acquired during the period. The System calculates the state depreciation for these assets from your federal depreciation entries on the Depreciation worksheet.

For assets acquired before January 1, 1985, South Carolina does NOT allow the Section 179 and ITC basis adjustment. After the asset is fully depreciated for federal purposes, the remaining depreciable basis (Section 179 and/or ITC) is depreciated (amortized) on the South Carolina return at:

50% per year for personal property
20% per year for real property.

You may need to make entries on the Depreciation worksheet, State if Different fields if an asset purchased before 1985 is fully depreciated for federal purposes and there is Section 179 and/or ITC basis reduction for the asset, or you have new purchase of SUV which is part of your current year Section 179 properties.

You can override the calculation of the difference between federal and state depreciation for South Carolina purposes on the Depreciation worksheet, State Override fields.

If depreciation totals have been entered on federal Income/Deduction category, Business worksheet, Other Depreciation and Amortization section, South Carolina will NOT automatically calculate the adjustment. Enter the total adjustment as an override on South Carolina Income/Deductions worksheet, Other Adjustments and Overrides section.

If the corporation exchanged property for an asset acquired before 1985, resulting in a higher state basis and you wish to depreciate the asset the same as in prior years, enter the South Carolina basis in the "Cost" field for that asset on the Depreciation worksheet.