Bill Text: NY S07033 | 2023-2024 | General Assembly | Introduced

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Bill Title: Provides for an angel investor income tax credit for investments in qualified businesses that exceed $25,000.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2024-01-03 - REFERRED TO BUDGET AND REVENUE [S07033 Detail]

Download: New_York-2023-S07033-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                          7033

                               2023-2024 Regular Sessions

                    IN SENATE

                                      May 17, 2023
                                       ___________

        Introduced  by  Sen.  CLEARE -- read twice and ordered printed, and when
          printed to be committed to the Committee on Budget and Revenue

        AN ACT to amend the tax law, in  relation  to  providing  for  an  angel
          investor tax credit

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. Section 606 of the tax law  is  amended  by  adding  a  new
     2  subsection (ppp) to read as follows:
     3    (ppp)  Angel investor credit. (1) Allowance of credit. A taxpayer, who
     4  is an angel investor, as defined by subparagraph (ii) of paragraph three
     5  of this subsection, shall be allowed a credit, to be computed as herein-
     6  after provided, against the tax imposed by this article,  for  investing
     7  twenty-five  thousand  dollars  or  more in a qualifying business.   The
     8  amount of the credit shall be twenty-five percent of the  investment  in
     9  the  qualifying business up to but not exceeding two hundred fifty thou-
    10  sand dollars.
    11    (2) Application of credit. If the amount  of  credit  allowable  under
    12  this subsection for any taxable year shall exceed the taxpayer's tax for
    13  such  year,  the  excess  may  be  carried over to the following year or
    14  years, and may be deducted from the taxpayer's  tax  for  such  year  or
    15  years.
    16    (3)  Definitions.  For  purposes  of  the  credit  described  in  this
    17  subsection:
    18    (i) "Qualifying business" shall mean a business enterprise,  including
    19  a sole proprietorship, partnership or corporation that:
    20    (A)  has  not  yet generated revenue or has gross revenues, along with
    21  the gross revenues of its affiliates and related members, not  exceeding
    22  one  million dollars for the taxable year immediately preceding the year
    23  the taxpayer is allowed a credit under this subsection. For purposes  of
    24  this paragraph, the term "related member" shall have the same meaning as
    25  set forth in clauses (A) and (B) of subparagraph one of paragraph (o) of

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11455-01-3
        S. 7033                             2

     1  subdivision  nine  of section two hundred eight of this chapter, and the
     2  term "affiliates" shall mean those corporations that are members of  the
     3  same affiliated group (as defined in section fifteen hundred four of the
     4  internal revenue code) as the taxpayer;
     5    (B)  has  no  more  than  twenty-five full-time employees, of which at
     6  least sixty percent are employed in New York state;
     7    (C) has operated in the state  for  no  more  than  seven  consecutive
     8  years; and
     9    (D)  has  received  no  more  than  two million dollars in investments
    10  eligible for the credit described in this subsection from  one  or  more
    11  than one angel investor;
    12    (ii)  "Angel investor" shall mean an accredited investor as defined in
    13  rule 501 of regulation D of the  Federal  Securities  Act  of  1933,  as
    14  amended; but shall not include:
    15    (A)  an  investor who controls fifty percent or more of the qualifying
    16  business receiving the investment subject to  the  credit  described  by
    17  this subsection; or
    18    (B)  a  venture  capital company or any bank, savings and loan associ-
    19  ation, trust, insurance company or similar entity, whose normal business
    20  activities include venture capital investment.
    21    § 2. Section 210-B of the tax law is amended by adding a new  subdivi-
    22  sion 60 to read as follows:
    23    60. Angel investor credit. (a) Allowance of credit. A taxpayer, who is
    24  an  angel  investor, as defined by subparagraph (ii) of paragraph (c) of
    25  this subdivision, shall be allowed a credit, to be computed  as  herein-
    26  after  provided,  against the tax imposed by this article, for investing
    27  twenty-five thousand dollars or more in  a  qualifying  business.    The
    28  amount  of  the credit shall be twenty-five percent of the investment in
    29  the qualifying business up to but not exceeding two hundred fifty  thou-
    30  sand dollars.
    31    (b)  Application  of credit. The credit allowed under this subdivision
    32  for any taxable year shall not reduce the tax due for such year to  less
    33  than  the  amount  prescribed  in  paragraph  (d)  of subdivision one of
    34  section two hundred ten of this article.   However,  if  the  amount  of
    35  credit  allowed  under this subdivision for any taxable year reduces the
    36  tax to such amount, any amount of credit thus  not  deductible  in  such
    37  taxable  year may be carried over to the following year or years and may
    38  be deducted from the taxpayer's tax for such year or years.
    39    (c) Definitions. For purposes of the credit described in this subdivi-
    40  sion:
    41    (i) "Qualifying business" shall mean a business enterprise,  including
    42  a sole proprietorship, partnership or corporation that:
    43    (A)  has  not  yet generated revenue or has gross revenues, along with
    44  the gross revenues of its affiliates and related members, not  exceeding
    45  one  million dollars for the taxable year immediately preceding the year
    46  the taxpayer is allowed a credit under this subdivision. For purposes of
    47  this paragraph, the term "related member" shall have the same meaning as
    48  set forth in clauses (A) and (B) of subparagraph one of paragraph (o) of
    49  subdivision nine of section two hundred eight of this article,  and  the
    50  term  "affiliates" shall mean those corporations that are members of the
    51  same affiliated group (as defined in section fifteen hundred four of the
    52  internal revenue code) as the taxpayer;
    53    (B) has no more than twenty-five  full-time  employees,  of  which  at
    54  least sixty percent are employed in New York state;
    55    (C)  has  operated  in  the  state  for no more than seven consecutive
    56  years; and
        S. 7033                             3

     1    (D) has received no more  than  two  million  dollars  in  investments
     2  eligible  for  the credit described in this subdivision from one or more
     3  than one angel investor;
     4    (ii)  "Angel investor" shall mean an accredited investor as defined in
     5  rule 501 of regulation D of the  Federal  Securities  Act  of  1933,  as
     6  amended; but shall not include:
     7    (A)  an  investor who controls fifty percent or more of the qualifying
     8  business receiving the investment subject to  the  credit  described  by
     9  this subdivision; or
    10    (B)  a  venture  capital company or any bank, savings and loan associ-
    11  ation, trust, insurance company or similar entity, whose normal business
    12  activities include venture capital investment.
    13    § 3. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
    14  of  the  tax  law  is  amended  by  adding  a new clause (li) to read as
    15  follows:

    16  (li) Angel investor credit              Amount of credit under
    17  under subsection (ppp)                  subdivision sixty of
    18                                          section two hundred ten-B

    19    § 4. This act  shall  take  effect  immediately  and  shall  apply  to
    20  personal income taxable years beginning on and after January 1, 2024.