South Carolina Research Expenses Credit

Program overview

South Carolina grants a credit equal to a percentage of qualified research expenses incurred in the state, using the federal Section 41 definition of qualified research. Unlike many states, the calculation is applied to total in-state qualified research expenses rather than to an increase over a base amount, which simplifies the analysis considerably. The annual credit is capped at a share of liability, but the ten-year carryforward preserves value for growing companies.

Eligibility

Taxpayers with qualified research expenses, as defined under IRC Section 41, for research conducted in South Carolina.

Benefits

Non-refundable credit limited to 50% of South Carolina tax liability after all other credits.

South Carolina IDR questions

What an examiner is likely to ask about this credit. S1–S7 apply to every state claim; the rest come from this program's own rules.

1. S1Confirm the research was physically performed within South Carolina.
2. S2Provide the South Carolina qualified research expense calculation and base amount.
3. S3Reconcile South Carolina expenses to the federal Form 6765.
4. S4Show how wages and supplies were apportioned between South Carolina and other locations.
5. S5Provide the South Carolina return and credit schedule for each year claimed.
6. S6Show the carryforward schedule for unused South Carolina credits.
7. S7Confirm the entity claiming the credit is the entity subject to South Carolina tax.

Draft questions for illustration, reviewed by a specialist before any engagement.