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(1) `economic impact zone' means a county or municipality, any portion of which is located within fifty miles of the boundaries of an applicable federal military installation, and any area not otherwise included as part of the economic impact zone if the State Budget and Control Board determines the area to be adversely impacted by the closing or realignment of an applicable federal military installation. An applicable federal military installation is one which is closed or realigned under:

(a) the Defense Base Closure and Realignment Act of 1990;

(b) Title II of the Defense Authorization Amendments and Base Closure and Realignment Act; or

(c) Section 2687 of Title 10, United States Code.

(2) `Internal Revenue Code' has the meaning provided in Section 12-7-20(11).

Section 12-14-40. (A) The designation of an area as an economic impact zone must be made by the State Budget and Control Board. It remains in effect during the period beginning on the date the board designates the area an economic impact zone and ending on the earlier of:

(1) December thirty-first of the fifteenth calendar year following the calendar year in which the designation occurs, or

(2) a termination date designated by legislative enactment of the General Assembly.

(B) A designation may be revoked by the General Assembly only after a hearing on the record in which officials of the county or municipality involved may participate.

Section 12-14-50. (A) In the case of an individual, there is allowed as a deduction against South Carolina taxable income an amount equal to twenty percent of the aggregate amount paid in cash by the taxpayer during the taxable year for the purchase of economic impact zone stock.

(B)(1) The maximum amount allowed as a deduction under subsection (A) to a taxpayer for the taxable year may not exceed the lesser of:

(a) ten thousand dollars; or

(b) the excess of one hundred thousand dollars over the amount allowed as a deduction under this section to the taxpayer for all prior taxable years.

(2) If the amount otherwise deductible by the person under subsection (A) exceeds the limitation under subsection (B)(1)(a):

(a) the amount of such excess is treated as an amount paid to which subsection (A) applies during the next taxable year; and

(3) The taxpayer and members of the taxpayer's family are treated as one person for purposes of subitem (1), and the limitations contained in such subitem must be allocated among the taxpayer and such members in accordance with their respective purchases of economic impact zone stock. For purposes of this section, an individual's family includes only such individual's spouse and minor children.

(C) For purposes of this section:

(1) the term `economic impact zone stock' means stock of a corporation if:

(a) such stock is acquired on original issue from the corporation; and

(b) such corporation is, at the time of issue, a qualified enterprise zone issuer.

(2) (a) `Economic impact zone stock' includes such stock only to the extent that the proceeds of the stock issue are used by the issuer during the twelve-month period beginning on the date of issuance to purchase qualified economic impact zone property.

(b) For purposes of this section, the term `qualified economic impact zone property' means property to which Section 168 of the Internal Revenue Code applies:

(i) the original use of which in an economic impact zone commences with the issuer; and

(ii) substantially all of the use of which is in an economic impact zone.

(3) The term `economic impact zone stock' does not include any stock acquired from a corporation which made a substantial stock redemption or distribution (without a bona fide business purpose therefor) in an attempt to avoid the purposes of this section.

(D) For purposes of this section, the term `qualified economic impact zone issuer' means any `C' corporation if:

(1) the corporation is an economic impact zone business or, in the case of a new corporation, the corporation is being organized for purposes of being an economic impact zone business;

(2) the sum of:

(a) the money;

(b) the aggregate adjusted bases of property owned by the corporation; and

(3) more than twenty percent of the total voting power, and twenty percent of the total value, of the stock of the corporation is owned directly by individuals or estates or indirectly by individuals through partnerships or trusts. The determination under subsection (3) must be made as of the time of issuance of the stock in question but shall include amounts received for the stock.

(E) The basis of any economic impact zone stock must be reduced by the amount of the deduction allowed under this section with respect to the stock.

(F) (1) In the case of a partnership or an `S' corporation, the limitations under subsection (B) apply at the partner and shareholder level and do not apply at the partnership or corporation level.

(2) Estates and trusts are not treated as individuals for purposes of this section.

Section 12-14-80. (A) There is allowed as a credit against the tax imposed pursuant to Chapter 7 of this title an economic impact zone investment tax credit for any taxable year in an amount equal to five percent of the aggregate bases of economic impact zone qualified manufacturing and productive equipment properties placed in service during such taxable year in the economic impact zone.

(B) For purposes of this section:

(1) `economic impact zone qualified manufacturing and productive equipment property' means any property:

(a) which is used as an integral part of manufacturing, production, or extraction of or furnishing transportation, communications, electrical energy, gas, water, or sewage disposal services in the economic impact zone;

(b) which is tangible property to which Section 168 of the Internal Revenue Code applies;

(c) which is Section 1245 property (as defined in Section 1245(a)(3)of the Internal Revenue Code); and

(d) (i) the construction, reconstruction, or erection of which is completed by the taxpayer in the economic impact zone; or

(ii) which is acquired by the taxpayer if the original use of such property commences with the taxpayer inside the economic impact zone.

(2) In the case of any computer software which is used to control or monitor a manufacturing or production process inside the economic

(C) This section does not apply to any property to which the other tax credits would apply unless the taxpayer elects to waive the application of the other credits to the property.

Section 12-14-90. (A) For purposes of this chapter, `economic impact zone business' means, with respect to any taxable year, any corporation if for such year:

(1) (a) every trade or business of such corporation is the active conduct of a qualified business within an economic impact zone; and

(b) at least eighty percent of the total gross income of the corporation is derived from the active conduct of the business;

(2) substantially all of the use of the tangible property of the corporation (whether owned or leased) is within an economic impact zone;

(3) substantially all of the intangible property of the corporation is used in, and exclusively related to, the active conduct of any such business;

(4) substantially all of the services performed for the corporation by its employees are performed within an economic impact zone;

(5) at least one-third of its employees are residents of an economic impact zone;

(6) less than five percent of the average of the aggregate unadjusted bases of the property of such corporation is attributable to collectibles (as defined in Section 408(m)(2) of the Internal Revenue Code) other than collectibles that are held primarily for sale to customers in the ordinary course of such business; and

(7) less than five percent of the average of the aggregate unadjusted bases of the property of such corporation is attributable to nonqualified financial property.

(B) For purposes of this chapter:

(1) Except as otherwise provided in this subsection, the term `qualified business' means any trade or business.

(2) The rental to others of real property located in an economic impact zone may be treated as a qualified business only if:

(a) in the case of real property which is not residential rental property (as defined in Section 168(e)(2) of the Internal Revenue Code), the lessee is an economic impact zone business; or

(b) in the case of residential rental property:

(i) the property was originally placed in service after the date the economic impact zone was designated; or

(3) The rental to others of tangible personal property must be treated as a qualified business only if substantially all of the rental of the property is by economic impact zone businesses or by residents of an economic impact zone.

(4) `Qualified business' does not include any trade or business consisting predominantly of the development or holding of intangibles for sale or license.

(5) The term `qualified business' does not include:

(a) any trade or business consisting of the operation of any facility described in Section 144(c)(6)(B) of the Internal Revenue Code; and

(b) any trade or business the principal activity of which is farming (within the meaning of subsections (A) or (B) of Section 2032A(e)(5) of the Internal Revenue Code), but only if, as of the close of the preceding taxable year, the sum of:

(i) the aggregate unadjusted bases (or, if greater, the fair market value) of the assets owned by the taxpayer which are used in such trade or business; and

(ii) the aggregate value of assets leased by the taxpayer which are used in such a trade or business, exceeds five hundred thousand dollars.

For purposes of subitem (b), rules similar to the rules of Section 1395(b) of the Internal Revenue Code apply.

(6) For purposes of this chapter, the term `nonqualified financial property' means debt, stock, partnership interests, options, futures contracts, forward contracts, warrants, notional principal contracts, annuities, and other similar property specified in regulations, except that the term does not include:

(a) reasonable amounts of working capital held in cash, cash equivalents, or debt instruments with a term of eighteen months or less; or

(b) debt instruments described in Section 1221(4) of the Internal Revenue Code."

SECTION 3. Section 12-7-1200 of the 1976 Code is amended to read:

"Section 12-7-1200. When a taxpayer maintains books of accounts and records in such manner as to clearly reflect the true net income accruing or arising from sources within this State the return may, with the approval of the Commission, be based upon such books of account or records and

(A) If the allocation and apportionment provisions of this chapter do not fairly represent the extent of the taxpayer's business activity in this State, the taxpayer may petition for, or the department may require, in respect to all or any part of the taxpayer's business activity, if reasonable:

(1) separate accounting;

(2) the exclusion of one or more of the factors;

(3) the inclusion of one or more additional factors which will fairly represent the taxpayer's business activity in the State; or

(4) the employment of any other method to effectuate an equitable allocation and apportionment of the taxpayer's income.

(B) For the purposes of this chapter, the department may enter into an agreement with the taxpayer establishing the allocation and apportionment of the taxpayer's income for a period not to exceed five years, if the following conditions are met:

(1) the taxpayer is planning a new facility in this State or an expansion of an existing facility;

(2) the taxpayer asks the department to enter into a contract under this subsection reciting an allocation and apportionment method; and

(3) after reviewing the taxpayer's proposal and planned new facility or expansion, the Advisory Coordinating Council for Economic Development certifies that the new facility or expansion will have a significant beneficial economic effect on the region for which it is planned and that its benefits to the public exceed its costs to the public. It is within the Advisory Coordinating Council for Economic Development's sole discretion to determine whether a new facility or expansion has a significant economic effect on the region for which it is planned."

SECTION 4. This act takes effect upon approval by the Governor./

Amend title to conform.

Senator PASSAILAIGUE explained the amendment.

Senator LEATHERMAN proposed the following Amendment No. 4 (GJK\21554SD.95), which was adopted:

Amend the bill, as and if amended, in Section 12-10-20 of the 1976 Code, as contained in SECTION 1, by inserting after /processing,/ on line 8, page 2, and on line 19, page 2, /services,/;

Amend the bill further, as and if amended, in Section 12-10-30 of the 1976 Code, as contained in SECTION 1, by adding a new item (6) to read:

/(6) `Services' means engagement primarily in an activity or activities listed under the Standard Industrial Classification (SIC) Code 80 according to the Federal Office of Management and Budget Standard Industrial Classification Manual 1987 edition./;

Amend the bill further, as and if amended, in Section 12-10-50 of the 1976 Code, as contained in SECTION 1, by striking item (1) which begins on line 40, page 3, and inserting:

/(1) it must be primarily engaged in a business of the type identified in Section 12-7-1220, or in the alternative it must be primarily engaged in a business providing services as defined in Section 12-10-30;/;

Amend the bill further, as and if amended, in Section 12-10-70 of the 1976 Code, as contained in SECTION 1, by adding a new item (4) to read:

/(4) If the qualifying business is of a type that does not qualify for the jobs tax credit as provided in Section 12-7-1220 because it only provides services as defined in Section 12-10-30, notwithstanding any other provision of law, it shall be entitled to receive the jobs tax credit for new jobs created under Section 12-7-1220 if it locates or expands in an enterprise zone and otherwise meets the requirements of Section 12-7-1220./

Renumber sections to conform.

Amend totals and title to conform.

Senator PASSAILAIGUE explained the amendment.

There being no further amendments, the Bill was read the third time and ordered returned to the House of Representatives with amendments.

The following Bill was read the third time and ordered sent to the House of Representatives:

S. 97 -- Senators Hayes, Elliott, Giese and Wilson: A BILL TO AMEND SECTION 16-13-420, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO FAILURE TO RETURN RENTED OBJECTS AND FRAUDULENT APPROPRIATION OF THE SAME, SO AS TO, AMONG OTHER THINGS, ESTABLISH CERTAIN NEW MISDEMEANOR OFFENSES, INCLUDING THAT OF WILFUL AND FRAUDULENT FAILURE TO RETURN A MOTOR VEHICLE FOR MORE THAN ONE WEEK AFTER THE LEASE OR RENTAL AGREEMENT HAS EXPIRED, AND PROVIDE PENALTIES.

By prior motion of Senator COURTNEY of Thursday, February 9, 1995, the Senate agreed that, when the Senate stands adjourned on Thursdays in statewide session, it stand adjourned to reconvene on Fridays at 11:00 A.M., under the provisions of Rule 1 for the purpose of taking up local matters and uncontested matters which have previously received unanimous consent to be taken up; and that when the Senate stands adjourned on Fridays, that it stand adjourned to reconvene on Tuesdays at 12:00 Noon.

At 12:35 P.M., on motion of Senator DRUMMOND, the Senate adjourned to meet tomorrow at 11:00 A.M. under the provisions of Rule 1 for the purpose of taking up local matters and uncontested matters which have previously received unanimous consent to be taken up.

Indicates Matter Stricken
Indicates New Matter

The Senate assembled at 11:00 A.M., the hour to which it stood adjourned and was called to order by the ACTING PRESIDENT, Senator GIESE.

At 11:10 A.M., on motion of Senator JACKSON, the Senate adjourned to meet next Tuesday, March 21, 1995, at 12:00 Noon.

Indicates Matter Stricken
Indicates New Matter

The Senate assembled at 12:00 Noon, the hour to which it stood adjourned and was called to order by the PRESIDENT.

A quorum being present the proceedings were opened with a devotion by the Chaplain as follows:

Beloved, hear words from the Book of Revelation, Chapter 21 (v. 3):

"And I heard a loud voice from
the throne saying,
`Now the dwelling of God

is with men,
And He will live with them.
They will be His people, and
God Himself will be with them
and be their God'."
Let us pray.

To the Throne-Room of the Most High God, we come, Jehovah Lord, before we begin our deliberations with each other.

Our people have elected us and sent us to these halls to serve them, but we believe that they rejoice to know that first we are servants, even here, of our God.

Our Father, we know that the golden age lies not behind us, but it could be ahead of us.

But we know that if we are to share a "golden age", then, mankind's corporate will must be totally surrendered to the divine will... as the Creator intended it in the Garden of Eden.

So, help us to seek the golden age not recreated in the memories of our dreams, but created anew out of the turmoil of our present age, and shaped into the desires of our hearts' yearnings, because we seek each day to be God's people for our age.

Amen.

The PRESIDENT called for Petitions, Memorials, Presentments of Grand Juries and such like papers.

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