A nonresident individual, a nonresident trust, a nonresident estate, and a nonresident beneficiary shall report and compute South Carolina taxable income as a resident taxpayer of this State subject to the following modifications:

(1) South Carolina taxable income, gains, losses, or deductions include only amounts attributable to:

(a) the ownership of any interest in real or tangible personal property located in this State;

(b) a business, trade, profession, or occupation carried on in this State or compensation for services performed in this State. If a business, trade, profession, or occupation is carried on or compensation is for services performed partly within and partly without this State, the amount allocable or apportionable to this State under Article 17 of this chapter must be included in South Carolina income;

(c) income from intangible personal property, including annuities, dividends, interest, and gains that is derived from property employed in a trade, business, profession, or occupation carried on in this State. For purposes of this item, a taxpayer, other than a dealer holding property primarily for sale to customers in the ordinary course of the nonresident's trade or business, is not considered to carry on a business, trade, profession, or occupation in South Carolina solely by reason of the purchase and sale of property for the nonresident's own account;

(d) the distributive share of the South Carolina portion of partnership, "S" Corporation, estate, and trust income, gains, losses, and deductions;

(e) lottery or bingo winnings.

(2) The South Carolina taxable income of a nonresident individual, nonresident estate, or nonresident trust must be adjusted as follows:

(a)(i) For a nonresident individual, the personal exemptions and the applicable standard deduction or itemized deductions must be reduced to an amount which is the same proportion as South Carolina adjusted gross income is to federal adjusted gross income.

(ii) For a nonresident estate or nonresident trust, the personal exemption and itemized deductions must be reduced to an amount which is the same proportion as South Carolina gross income is to federal gross income.

(b) For purposes of the computation in item (2)(a), South Carolina adjusted gross income means the adjusted gross income of the taxpayer calculated as provided in Section 12-6-1720(1). Adjustments to gross income authorized by Internal Revenue Code Section 62 must be apportioned based on the ratio of South Carolina gross income to federal gross income. However, if the adjustment is directly connected with an item of gross income, the adjustment is allowed only to the extent the item of income is taxable in this State.

(3) The South Carolina taxable income of a nonresident estate or nonresident trust as determined in items (1) and (2) of this section must be allocated among the estate or trust and its beneficiaries, including solely for purposes of this allocation, resident beneficiaries, in proportion to their respective shares of federal distributable net income.

If for the taxable year the estate or trust does not have distributable net income for federal tax purposes, the South Carolina taxable income must be allocated between the estate or trust and its beneficiaries as follows:

(a) The personal representative or trustee shall recompute distributable net income in the same manner as federal distributable net income but including only those items which enter into the computation of the South Carolina taxable income of a nonresident estate or nonresident trust.

(b) The South Carolina taxable income of a nonresident estate or nonresident trust must then be allocated among the estate or trust and its beneficiaries, including solely for purposes of this allocation, resident beneficiaries, in proportion to their respective shares of this recomputed distributable net income.

HISTORY: 1995 Act No. 76, Section 1; 2005 Act No. 161, Section 6, eff June 9, 2005.