During a brief special session, South Carolina lawmakers passed conformity legislation, House Bill 5341, which was signed into law on October 3, 2018. Under the bill, except as otherwise provided, “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended through February 9, 2018. The conformity bill applies to tax years beginning after 2017. Historically, by statute, South Carolina has not adopted several sections of the Internal Revenue Code, including sections 944 through 989 relating to the taxation of foreign income. The conformity bill expands the list of sections that are not adopted by South Carolina, including but not limited to, section 250 (providing a reduced rate for GILTI and FDII), section 163(j) (limiting business interest deductions), section 118(b)(2) (including in income any contribution by any governmental entity or civic group, other than a contribution made by a shareholder as such) and section 199A (allowing a deduction for qualified business income). Interestingly, South Carolina does adopt section 1400Z, which provides a deferral of gains reinvested into an Opportunity Fund available under federal law and a permanent exclusion of gains from the sale or exchange of an investment in an Opportunity Fund available under federal law. Please contact Jeana Parker at 919-664-7143 with questions.