Bill Text: NY A07160 | 2013-2014 | General Assembly | Introduced
Bill Title: Relates to the establishment of the angel investment tax credit for qualified emerging technologies.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2014-01-08 - referred to ways and means [A07160 Detail]
Download: New_York-2013-A07160-Introduced.html
S T A T E O F N E W Y O R K ________________________________________________________________________ 7160 2013-2014 Regular Sessions I N A S S E M B L Y May 3, 2013 ___________ Introduced by M. of A. ROSENTHAL -- read once and referred to the Committee on Ways and Means AN ACT to amend the tax law, in relation to the establishment of the angel investment tax credit for qualified emerging technologies; to repeal certain provisions of such law relating thereto; and providing for the repeal of such provisions upon expiration thereof THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: 1 Section 1. Subdivision 12-F of section 210 of the tax law is REPEALED 2 and a new subdivision 12-F is added to read as follows: 3 12-F. ANGEL INVESTMENT TAX CREDIT. (A) FOR THE PURPOSES OF THIS SUBDI- 4 VISION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS: 5 (1) "QUALIFIED EMERGING TECHNOLOGY COMPANY" SHALL MEAN A PRIVATE 6 COMPANY AS DEFINED IN SUBPARAGRAPH ONE OF PARAGRAPH (C) OF SUBDIVISION 7 ONE OF SECTION THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW. 8 (2) "SEED COMPANY" SHALL MEAN A QUALIFIED EMERGING TECHNOLOGY COMPANY 9 WITH ANNUAL REVENUE OF LESS THAN FIVE MILLION DOLLARS OR A QUALIFIED 10 EMERGING TECHNOLOGY COMPANY THAT MAY NOT YET HAVE FULLY ESTABLISHED 11 COMMERCIAL OPERATIONS TO ENABLE SUCH COMPANY TO CONDUCT RESEARCH TO 12 PROVE A CONCEPT. 13 (3) "QUALIFIED ANGEL INVESTMENT" SHALL MEAN THE INVESTMENT OF MONEY IN 14 A SEED COMPANY IN EXCHANGE FOR ORIGINAL ISSUE CAPITAL STOCK OR OTHER 15 OWNERSHIP INTEREST, PROVIDED, THAT REPAYMENT OF THE INVESTMENT IS 16 DEPENDENT ON THE SUCCESS OF THE BUSINESS OPERATIONS AND IS NOT SECURED 17 BY A LIEN ON BUSINESS ASSETS OR A PERSONAL GUARANTY OF ANY PRINCIPAL 18 OWNER, AND PROVIDED, FURTHER, THAT SUCH INVESTMENT IS NOT MADE BY OR ON 19 BEHALF OF AN OWNER OF THE BUSINESS, INCLUDING, BUT NOT LIMITED TO, A 20 STOCKHOLDER, PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON AS 21 DEFINED IN SECTION 465(B)(3)(C) OF THE INTERNAL REVENUE CODE. 22 (4) "QUALIFIED ANGEL NETWORK FUND INVESTMENT" SHALL MEAN THE AMOUNT OF 23 COMMITTED CAPITAL A LIMITED PARTNER HAS ACTUALLY TRANSFERRED TO A SEED EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD10512-01-3 A. 7160 2 1 CAPITAL FUND PROVIDED, THAT SUCH FUND WAS ESTABLISHED SOLELY TO MAKE 2 QUALIFIED ANGEL INVESTMENTS. 3 (B) A TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY 4 THIS ARTICLE. THE AMOUNT OF THE CREDIT SHALL BE EQUAL TO THE SUM OF THE 5 AMOUNTS SPECIFIED IN SUBPARAGRAPHS ONE AND TWO OF THIS PARAGRAPH. 6 (1) FORTY PERCENT OF A QUALIFIED ANGEL INVESTMENT, PROVIDED THAT TWEN- 7 TY PERCENT OF THE QUALIFIED ANGEL INVESTMENT CAN BE TAKEN AS A CREDIT IN 8 THE TAXABLE YEAR IN WHICH THE INVESTMENT WAS MADE AND TEN PERCENT OF THE 9 QUALIFIED ANGEL INVESTMENT CAN BE TAKEN AS A CREDIT IN EACH OF THE NEXT 10 TWO TAXABLE YEARS, AND FURTHER PROVIDED THAT SUCH INVESTMENT IS NOT 11 SOLD, TRANSFERRED OR OTHERWISE RECOVERED BY THE TAXPAYER DURING THE 12 TAXABLE YEAR THE INVESTMENT WAS MADE OR WITHIN TWENTY-FOUR MONTHS FROM 13 THE CLOSE OF THE TAXABLE YEAR IN WHICH THE CREDIT WAS FIRST CLAIMED. THE 14 TOTAL AMOUNT OF CREDITS ALLOWABLE TO A TAXPAYER UNDER THIS SUBPARAGRAPH 15 FOR ALL YEARS IS SIX HUNDRED THOUSAND DOLLARS. 16 (2) TWENTY PERCENT OF A QUALIFIED ANGEL NETWORK FUND INVESTMENT, 17 PROVIDED THAT TEN PERCENT OF THE QUALIFIED ANGEL FUND INVESTMENT CAN BE 18 TAKEN AS A CREDIT IN THE TAXABLE YEAR IN WHICH THE INVESTMENT WAS MADE 19 AND FIVE PERCENT OF THE QUALIFIED ANGEL NETWORK FUND INVESTMENT CAN BE 20 TAKEN AS A CREDIT IN EACH OF THE NEXT TWO TAXABLE YEARS, AND FURTHER 21 PROVIDED THAT SUCH INVESTMENT IS NOT SOLD, TRANSFERRED OR OTHERWISE 22 RECOVERED BY THE TAXPAYER DURING THE TAXABLE YEAR THE INVESTMENT WAS 23 MADE OR WITHIN TWENTY-FOUR MONTHS FROM THE CLOSE OF THE TAXABLE YEAR IN 24 WHICH THE CREDIT WAS FIRST CLAIMED. THE TOTAL AMOUNT OF CREDITS ALLOW- 25 ABLE TO A TAXPAYER UNDER THIS SUBPARAGRAPH FOR ALL YEARS IS THREE 26 HUNDRED THOUSAND DOLLARS. 27 (C) IN NO EVENT SHALL THE CREDIT AND CARRYOVER OF SUCH CREDIT ALLOWED 28 UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR, IN THE AGGREGATE, REDUCE 29 THE TAX DUE FOR SUCH YEAR TO LESS THAN THE HIGHER OF THE AMOUNTS 30 PRESCRIBED IN PARAGRAPHS (C) AND (D) OF SUBDIVISION ONE OF THIS SECTION. 31 PROVIDED, HOWEVER, IF THE AMOUNT OF CREDIT OR CARRYOVERS OF SUCH CREDIT, 32 OR BOTH, ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE 33 TAX TO SUCH AMOUNT, OR IF ANY PART OF THE CREDIT OR CARRYOVERS OF SUCH 34 CREDIT MAY NOT BE DEDUCTED FROM THE TAX OTHERWISE DUE BY REASON OF THE 35 FINAL SENTENCE OF THIS PARAGRAPH, ANY AMOUNT OF CREDIT OR CARRYOVERS OF 36 SUCH CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED OVER 37 TO THE FOLLOWING YEAR OF YEARS AND MAY BE DEDUCTED FROM THE TAX FOR SUCH 38 YEAR OR YEARS. IN ADDITION, THE AMOUNT OF SUCH CREDIT, AND CARRYOVERS OF 39 SUCH CREDIT TO THE TAXABLE YEAR, DEDUCTED FROM THE TAX OTHERWISE DUE MAY 40 NOT, IN THE AGGREGATE, EXCEED FIFTY PERCENT OF THE TAX IMPOSED UNDER 41 SECTION TWO HUNDRED NINE OF THIS ARTICLE COMPUTED WITHOUT REGARD TO ANY 42 CREDIT PROVIDED FOR BY THIS SECTION. 43 (D) WHERE A TAXPAYER SELLS, TRANSFERS, OR OTHERWISE RECOVERS THE 44 INVESTMENT, IN WHOLE OR IN PART, WHICH WAS THE BASIS FOR THE ALLOWANCE 45 OF CREDIT PROVIDED FOR UNDER SUBPARAGRAPHS ONE OR TWO OF PARAGRAPH (B) 46 OF THIS SUBDIVISION, DURING THE TAXABLE YEAR THE INVESTMENT WAS MADE OR 47 WITHIN TWENTY-FOUR MONTHS FROM THE CLOSE OF THE TAXABLE YEAR IN WHICH 48 THE CREDIT WAS FIRST CLAIMED, THE TAXPAYER SHALL NOT BE ALLOWED THE 49 PORTION OF THE CREDIT ATTRIBUTABLE TO SUCH INVESTMENT WITH RESPECT TO 50 THE TAXABLE YEAR IN WHICH THE RECOVERY DESCRIBED ABOVE OCCURRED AND THE 51 FOLLOWING TAXABLE YEARS. 52 S 2. Subsection (r) of section 606 of the tax law is REPEALED and a 53 new subsection (r) is added to read as follows: 54 (R) ANGEL INVESTMENT TAX CREDIT. (1) FOR THE PURPOSES OF THIS 55 SUBSECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS: A. 7160 3 1 (A) "QUALIFIED EMERGING TECHNOLOGY COMPANY" SHALL MEAN A PRIVATE 2 COMPANY AS DEFINED IN SUBPARAGRAPH ONE OF PARAGRAPH (C) OF SUBDIVISION 3 ONE OF SECTION THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW. 4 (B) "SEED COMPANY" SHALL MEAN A QUALIFIED EMERGING TECHNOLOGY COMPANY 5 WITH ANNUAL REVENUE OF LESS THAN FIVE MILLION DOLLARS OR A QUALIFIED 6 EMERGING TECHNOLOGY COMPANY THAT MAY NOT YET HAVE FULLY ESTABLISHED 7 COMMERCIAL OPERATIONS TO ENABLE SUCH COMPANY TO CONDUCT RESEARCH TO 8 PROVE A CONCEPT. 9 (C) "QUALIFIED ANGEL INVESTMENT" SHALL MEAN THE INVESTMENT OF MONEY IN 10 A SEED COMPANY IN EXCHANGE FOR ORIGINAL ISSUE CAPITAL STOCK OR OTHER 11 OWNERSHIP INTEREST, PROVIDED THAT REPAYMENT OF THE INVESTMENT IS DEPEND- 12 ENT ON THE SUCCESS OF THE BUSINESS OPERATIONS AND IS NOT SECURED BY A 13 LIEN ON BUSINESS ASSETS OR A PERSONAL GUARANTY OF ANY PRINCIPAL OWNER, 14 AND PROVIDED FURTHER THAT SUCH INVESTMENT IS NOT MADE BY OR ON BEHALF OF 15 AN OWNER OF THE BUSINESS, INCLUDING, BUT NOT LIMITED TO, A STOCKHOLDER, 16 PARTNER OR SOLE PROPRIETOR, OR ANY RELATED PERSON AS DEFINED IN SECTION 17 465(B)(3)(C) OF THE INTERNAL REVENUE CODE. 18 (D) "QUALIFIED ANGEL NETWORK FUND INVESTMENT" SHALL MEAN THE AMOUNT OF 19 COMMITTED CAPITAL A LIMITED PARTNER HAS ACTUALLY TRANSFERRED TO A SEED 20 CAPITAL FUND, PROVIDED THAT SUCH FUND WAS ESTABLISHED SOLELY TO MAKE 21 QUALIFIED ANGEL INVESTMENTS. 22 (2) A TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY 23 THIS ARTICLE. THE AMOUNT OF THE CREDIT SHALL BE EQUAL TO THE SUM OF THE 24 AMOUNTS SPECIFIED IN SUBPARAGRAPHS (A) AND (B) OF THIS PARAGRAPH. 25 (A) FORTY PERCENT OF A QUALIFIED ANGEL INVESTMENT, PROVIDED THAT TWEN- 26 TY PERCENT OF THE QUALIFIED ANGEL INVESTMENT CAN BE TAKEN AS A CREDIT IN 27 THE TAXABLE YEAR IN WHICH THE INVESTMENT WAS MADE AND TEN PERCENT OF THE 28 QUALIFIED ANGEL INVESTMENT CAN BE TAKEN AS A CREDIT IN EACH OF THE NEXT 29 TWO TAXABLE YEARS, AND FURTHER PROVIDED THAT SUCH INVESTMENT IS NOT 30 SOLD, TRANSFERRED OR OTHERWISE RECOVERED BY THE TAXPAYER DURING THE 31 TAXABLE YEAR THE INVESTMENT WAS MADE OR WITHIN TWENTY-FOUR MONTHS FROM 32 THE CLOSE OF THE TAXABLE YEAR IN WHICH THE CREDIT WAS FIRST CLAIMED. THE 33 TOTAL AMOUNT OF CREDITS ALLOWABLE TO A TAXPAYER UNDER THIS SUBPARAGRAPH 34 FOR ALL YEARS IS SIX HUNDRED THOUSAND DOLLARS. 35 (B) TWENTY PERCENT OF A QUALIFIED ANGEL NETWORK FUND INVESTMENT, 36 PROVIDED THAT TEN PERCENT OF THE QUALIFIED ANGEL NETWORK FUND INVESTMENT 37 CAN BE TAKEN AS A CREDIT IN THE TAXABLE YEAR IN WHICH THE THE INVESTMENT 38 WAS MADE AND FIVE PERCENT OF THE QUALIFIED ANGEL NETWORK FUND INVESTMENT 39 CAN BE TAKEN AS A CREDIT IN EACH OF THE NEXT TWO TAXABLE YEARS, AND 40 FURTHER PROVIDED THAT SUCH INVESTMENT IS NOT SOLD, TRANSFERRED OR OTHER- 41 WISE RECOVERED BY THE TAXPAYER DURING THE TAXABLE YEAR THE INVESTMENT 42 WAS MADE OR WITHIN TWENTY-FOUR MONTHS FROM THE CLOSE OF THE TAXABLE YEAR 43 IN WHICH THE CREDIT WAS FIRST CLAIMED. THE TOTAL AMOUNT OF CREDITS 44 ALLOWABLE TO A TAXPAYER UNDER THIS SUBPARAGRAPH FOR ALL YEARS IS THREE 45 HUNDRED THOUSAND DOLLARS. 46 (3) (A) IF THE AMOUNT OF THE CREDIT AND CARRYOVERS OF SUCH CREDIT 47 ALLOWED UNDER THIS SUBSECTION FOR ANY TAXABLE YEAR SHALL EXCEED THE 48 TAXPAYER'S TAX FOR SUCH YEAR, ANY AMOUNT OF CREDIT OR CARRYOVERS OF SUCH 49 CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED OVER TO 50 THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAX FOR SUCH 51 YEAR OR YEARS. IN ADDITION, THE AMOUNT OF SUCH CREDIT, AND CARRYOVERS OF 52 SUCH CREDIT TO THE TAXABLE YEAR, DEDUCTED FROM THE TAX OTHERWISE DUE MAY 53 NOT, IN THE AGGREGATE, EXCEED FIFTY PERCENT OF THE TAX IMPOSED UNDER 54 SECTION SIX HUNDRED ONE OF THIS ARTICLE COMPUTED WITHOUT REGARD TO ANY 55 CREDIT PROVIDED FOR BY THIS SECTION. A. 7160 4 1 (B) IN THE CASE OF A HUSBAND OR WIFE WHO IS REQUIRED TO FILE A SEPA- 2 RATE RETURN, THE LIMITATIONS PROVIDED FOR IN SUBPARAGRAPH (B) OF PARA- 3 GRAPH TWO OF THIS SUBSECTION SHALL BE ONE HUNDRED FIFTY THOUSAND DOLLARS 4 IN LIEU OF THREE HUNDRED THOUSAND DOLLARS, AND THE LIMITATIONS PROVIDED 5 FOR IN SUBPARAGRAPH (A) OF PARAGRAPH TWO OF THIS SUBSECTION SHALL BE 6 THREE HUNDRED THOUSAND DOLLARS IN LIEU OF SIX HUNDRED THOUSAND DOLLARS, 7 UNLESS THE SPOUSE OF THE TAXPAYER HAS NO CREDIT ALLOWABLE UNDER THIS 8 SUBSECTION FOR THE TAXABLE YEAR OF SUCH SPOUSE WHICH ENDS WITHIN OR WITH 9 THE TAXPAYER'S TAXABLE YEAR. 10 (C) IN THE CASE OF AN ESTATE OR TRUST, THE LIMITATIONS PROVIDED FOR IN 11 PARAGRAPH TWO OF THIS SUBSECTION SHALL BE REDUCED TO AN AMOUNT WHICH 12 BEARS THE SAME RATIO TO THREE HUNDRED THOUSAND DOLLARS AND AN AMOUNT 13 WHICH BEARS THE SAME RATIO TO SIX HUNDRED THOUSAND DOLLARS AS THE 14 PORTION OF THE INCOME OF THE ESTATE OR TRUST WHICH IS NOT ALLOCATED TO 15 BENEFICIARIES BEARS TO THE TOTAL INCOME OF THE ESTATE OR TRUST. 16 (4) WHERE A TAXPAYER SELLS, TRANSFERS, OR OTHERWISE RECOVERS THE 17 INVESTMENT, IN WHOLE OR IN PART, WHICH WAS THE BASIS FOR THE ALLOWANCE 18 OF CREDIT PROVIDED FOR UNDER SUBPARAGRAPHS (A) OR (B) OF PARAGRAPH TWO 19 OF THIS SUBSECTION, DURING THE TAXABLE YEAR THE INVESTMENT WAS MADE OR 20 WITHIN TWENTY-FOUR MONTHS FROM THE CLOSE OF THE TAXABLE YEAR IN WHICH 21 THE CREDIT WAS FIRST CLAIMED, THE TAXPAYER SHALL NOT BE ALLOWED THE 22 PORTION OF CREDIT ATTRIBUTABLE TO SUCH INVESTMENT WITH RESPECT TO THE 23 TAXABLE YEAR IN WHICH THE RECOVERY DESCRIBED ABOVE OCCURRED AND THE 24 FOLLOWING TAXABLE YEARS. 25 S 3. Clause (xi) of subparagraph (B) of paragraph 1 of subsection (i) 26 of section 606 of the tax law, as amended by section 7 of part C-1 of 27 chapter 57 of the laws of 2009, is amended to read as follows: 28 (xi) [Qualified emerging technology Qualified investments under 29 company capital] ANGEL INVESTMENT subdivision twelve-F 30 tax credit under subsection (r) of section two hundred ten 31 S 4. This act shall take effect immediately and shall apply to taxable 32 years beginning on and after January 1, 2014 and shall remain in effect 33 until December 31, 2019, when upon such date the provisions of this act 34 shall expire and be deemed repealed.