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Part III. - COMPUTATION OF FEDERAL TAXABLE INCOME OF THE ESTATE OR TRUST FROM SOUTH CAROLINA SOURCES

Part III is to be completed by all resident estates and trusts which have nonresident beneficiaries, and by all nonresident estates and trusts with income or

gain from South Carolina sources. Nonresident estates or trusts should report to South Carolina only that part of their federal taxable income derived from

South Carolina sources. See "Income from South Carolina Sources" under FILING REQUIREMENTS. In order to determine the income to be reported and the

modifications that relate thereto, complete Part III.

Column B: Enter in column B of Part III the total income or deductions reported or claimed on the federal fiduciary return for each item listed in column A.

Column C: Enter in column C that part of each item of income reported in Column B that is derived from South Carolina sources. Use direct accounting

whenever possible. Intangible income will not be considered to be from South Carolina sources except where it is a part of a business, trade, or occupation

carried on in South Carolina. Any item entered in column C should reflect only the amount that remains after all modifications have been performed.

For Example: State or local income taxes deducted on the federal return would not be included in column C. State income tax refunds reported as income on

the federal return would not be included in column C. Also, any income from other estates, trusts, or partnerships should be modified, if necessary, before the

item is entered in column C.

Capital gains from South Carolina sources should be entered in column C only if the gain is distributed to the beneficiaries.

Depreciation, depletion, and South Carolina estate tax on income in respect of a decedent should be entered on the appropriate lines of column C (whether or

not passed directly to the beneficiaries).

Deductions should be directly allocated where possible. If it is not possible to directly relate those deductions to income from South Carolina sources they

should be apportioned by multiplying the deductions by the ratio of total South Carolina income (line 9, column C) divided by total federal income (line 9,

column B).

Net income of the estate or trust from South Carolina sources after all modifications, is to be entered on line 22, column C.

Enter on line 23, column C the total percentages of all nonresident beneficiaries only. These percentages come from Part II, page 2.

Enter on line 24, column C the total income from South Carolina sources of all nonresident beneficiaries. This amount is computed by multiplying line 22,

column C by the percentage entered on line 23, Column C.

Column D: Column D is to be completed by nonresident fiduciaries only. Enter in column D that part of column C applicable to the fiduciary. The amount to be

entered.in column D is computed by multiplying each entry in column C by the fiduciary's percentage of the South Carolina fiduciary adjustment as shown in

Part II, page 2.

A capital gain from South Carolina sources that is not distributed to the beneficiaries should be entered on line 4 of column D.

Line 22, column D is the net income of the nonresident estate or trust from South Carolina sources applicable to the fiduciary which should be entered on line

page 1.

Part IV - NONRESIDENT BENEFICIARIES' SHARES OF INCOME AND CREDITS

Column A: Enter the names of the nonresident beneficiaries receiving distributable South Carolina income. If the Social

Security

numbers are not listed on

either page 2 or on Form SC41, attach a schedule of this information. It is important that the correct Social Security numbers be listed for each beneficiary to

assure proper posting to their accounts.

Column B: Enter in column B each nonresident beneficiary's percentage as computed in Part II, page 2.

Column C: Enter in column C the capital gain (loss) reportable to South Carolina by each nonresident beneficiary.

Column D: Enter each beneficiary's portion of the total ordinary income from South Carolina sources by multiplying column B by the amount on line 22,

column C, Part III, page 3 after subtracting any capital gain on line 4.

Column E: Enter the amount of each nonresident beneficiary's income that is exempt from withholding by affidavit.

Column F: Add columns C and column D less column E amounts. Compute 7% of these amounts for each beneficiary and enter the amount in column F. The

tax reported in this column is to be withheld by the fiduciary from the beneficiary. It is to be paid by the fiduciary to the state of South Carolina at the time

estimated tax payments are due. If any tax is required to be withheld, complete Form SC41 for each nonresident beneficiary.

PART V - NONRESIDENT EXEMPTION ALLOWANCE OF FIDUCIARY

Part V is to be completed only by nonresident estates or trusts. This part is to assist in the computation of the exemption allowance allowable to the

nonresident estate or trust.

Line 1 - Exemption Allowance Per Federal Return: Enter on line 1 the exemption allowance claimed on the federal fiduciary return.

Line 2 - Ratio: Divide the amount shown on line 9, column D, Part III, by the amount shown on line 9, column B, Part III.

Line 3 - South Carolina Nonresident Fiduciary Exemption: Multiply the amount on line 1 by percentage on line 2 and enter amount on line 3, Part V and line 6,

page 1, Form SC1041.

WHICH FIDUCIARIES MUST FILE A DECLARATION OF ESTIMATED TAX

Generally, a fiduciary must file a declaration of estimated tax if the expected total amount of tax owed when the return is filed will be $1000 or more. Estates

are not required to file a declaration of estimated tax for the first two tax years after decedent's death. To file estimated tax, complete a South Carolina

Declaration of Estimated Tax form (Form SC1041ES). If vouchers are required to be filed but were not received, contact the South Carolina Department of

Revenue.

Any fiduciary required to file a declaration of estimated tax must estimate and pay at least 90% of the final actual tax liability or the fiduciary can pay an

amount equal to 100% of the tax from the prior year's return (if the return covered all twelve months of the year). Certain estates and trusts cannot base their

declaration of estimated tax on t00% of their prior year's tax liability. Estates and trusts with an adjusted gross income of more than $150,000 as shown on the

return for the preceding tax year must pay 112% of their prior year's tax liability. To compute adjusted gross income use federal guidelines and make South

Carolina adjustments. Failure to meet the estimate requirements may subject the fiduciary to an underpayment penalty. Underpayment of estimate penalty is

calculated on Form SC2210 which is available upon request.

Social Security Privacy Act Disclosure

It is voluntary that you provide the social security number of the individual beneficiaries on this tax form. 42 U.S.C 405(c)(2)(C)(i) permits a state to use an

individual's social security number as moans of identification in administration of any tax. SC Regulation 117-1 mandates that any person required to make a

return to the SC Department of Revenue shall provide identifying numbers, as prescribed, for securing proper identification. Your social security number is

used for identification purposes.

Instructions Fo Form Sc1041 - Fiduciary Income Tax Return - South Carolina Department Of Revenue Page 4

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