S.C. Code Ann. § 62-7-409 – Allocation of distributions by corporations; regulated investment company and certain trusts

(a) Corporate distributions of shares of the distributing corporation, including distributions in the form of a stock split or stock dividend, are principal. A right to subscribe to shares or other securities issued by the distributing corporation accruing to stockholders on account of their stock ownership and the proceeds of any sale of the right are principal.
(b) Except to the extent that the corporation indicates that some part of a corporate distribution is a settlement of preferred to guaranteed dividends accrued since the trustee became a stockholder or is in lieu of an ordinary cash dividend, a corporate distribution is principal if the distribution is pursuant to:
1. (1) a call of shares;
2. (2) a merger, consolidation, reorganization, or other plan by which assets of the corporation are acquired by another corporation; or
3. (3) a total or partial liquidation of the corporation. For the purposes of this section, a distribution is pursuant to a liquidation if the corporation so indicates, or if the corporation is making a distribution of assets, other than cash, pursuant to a court decree or final administrative order by a government agency ordering distribution of the particular assets.
(c) Distributions made from ordinary income by a regulated investment company or by a trust qualifying and electing to be taxed as a real estate investment trust under federal law are income. All other distributions made by such a company or trust, including distributions from capital gains, depreciation, or depletion, whether in the form of cash or an option to take new stock or cash or an option to purchase additional shares, are principal.
(d) Except as provided in subsections (a), (b), and (c), all corporate distributions are income, including cash dividends, distributions of, or rights to, subscribe to shares or securities or obligations of corporations other than the distributing corporation, and the proceeds of such rights or property distributions. Except as provided in subsections (b) and (c), if the distributing corporation gives a stockholder an option to receive a distribution either in cash or in its own shares, the distribution chosen is income.
(e) The trustee may rely upon any statement of the distributing corporation as to any fact relevant under any provision of this part [Sections 62-7-401 et seq.] concerning the source or character of dividends or distributions of corporate assets.