A09958 Summary:

BILL NOA09958
 
SAME ASSAME AS S07403
 
SPONSORKellner
 
COSPNSRLupardo
 
MLTSPNSR
 
Amd SS606 & 210, Tax L
 
Provides for an angel investor income tax credit for investments in qualified businesses that exceed $25,000.
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A09958 Actions:

BILL NOA09958
 
04/26/2012referred to ways and means
06/19/2012held for consideration in ways and means
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A09958 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A9958
 
SPONSOR: Kellner
  TITLE OF BILL: An act to amend the tax law, in relation to providing for an angel investor tax credit   PURPOSE OR GENERAL IDEA OF BILL: To institute an angel investor tax credit to incentivize business investments in New York State   SUMMARY OF SPECIFIC PROVISIONS: Section 1: Amends section 606 of the tax law to establish an angel investor tax credit -Credit will be twenty-five percent of the investment in a qualifying business, but not exceeding two hundred fifty thousand dollars -a qualifying business is one that: (1)has gross revenues of less than one million dollars immediately preceding the year the credit is allowed for; (2) has no more than twenty five full time employees, sixty percent of whom must be a NYS resident; (3) has operated in the state for no more than seven consecutive years; (4) has received no more than two million dollars in investments eligible for the credit from one or more than one angel investor -an angel investor is an accredited investor as defined in rule 501 of regulation D of the Federal Securities Act of 1933 except for those who: (1) controls fifty percent or more of the qualifying business; (2) a venture capital company or any bank, savings and loan association, trust, insurance company or similar entity, whose normal business activ- ities include venture capital investment Section 2: Amends section 210 of the tax law to establish an angel investor tax credit -Credit will be twenty-five percent of the investment in a qualifying business, but not exceeding two hundred fifty thousand dollars -a qualifying business is one that: (1)has gross revenues of less than one million dollars immediately preceding the year the credit is allowed for; (2) has no more than twenty five full time employees, sixty percent of whom must be a NYS resident; (3) has operated in the state for no more than seven consecutive years; (4) has received no more than two million dollars in investments eligible for the credit from one or more than one angel investor -an angel investor is an accredited investor as defined in rule 501 of regulation D of the Federal Securities Act of 1933 except for those who: (1) controls fifty percent or more of the qualifying business; (2) a venture capital company or any bank, savings and loan association, trust, insurance company or similar entity, whose normal business activ- ities include venture capital investment Section 3: Amends subparagraph (B) of paragraph 1 of subsection (i) of section 606 of the tax law to establish an angel investor tax credit Section 4: This act shall take effect immediately and shall apply to personal income taxable years beginning on and after January 1, 2013   JUSTIFICATION: New York has made significant progress in its economic recovery. In fact, for the seventh straight quarter venture capitalists invested more money and closed more deals with New York-based internet startups than ones in Boston. Last quarter, New York Internet tech companies closed $434 million worth of funding in 60 deals compared with Boston's $303 million in 40 deals. If this momentum is to continue, New York must look to adopt policies that will give individuals further incentives to invest in our State. One way to spur this kind of investment is by adopting an 'Angel Inves- tor tax credit. This credit would allow investors to take a credit against the New York State income tax for investments of at least $25,000 in a qualifying business. Wisconsin offers a 25 percent credit and has seen angel investments statewide increase from $30 million in 2005 to $180 million in 2010. Angel investment tax credits are a win-win-win proposition. New business ventures benefit from an infusion of capital from the angel investors. The investors/taxpayers benefit from the tax credit, which effectively serves as an immediate return on their investments. Lastly, states benefit because the creation of new businesses increases employment and drives innovation, which ultimately enhance the local economy. Clearly, as an alternative to risking their funds in the Stock market or real estate, investors looking for that "sure thing" should consider angel investments.   PRIOR LEGISLATIVE HISTORY: None.   FISCAL IMPLICATIONS: Undetermined.   EFFECTIVE DATE: This act shall take effect immediately and shall apply to personal income taxable years beginning on and after January 1, 2013
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A09958 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          9958
 
                   IN ASSEMBLY
 
                                     April 26, 2012
                                       ___________
 
        Introduced  by M. of A. KELLNER -- read once and referred to the Commit-
          tee on Ways and Means
 
        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 (uu) to read as follows:
     3    (uu)  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
    26  subdivision  nine  of section two hundred eight of this chapter, and the
    27  term "affiliates" shall mean those corporations that are members of  the
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD14666-03-2

        A. 9958                             2
 
     1  same affiliated group (as defined in section fifteen hundred four of the
     2  internal revenue code) as the taxpayer;
     3    (B)  has  no  more  than  twenty-five full-time employees, of which at
     4  least sixty percent are employed in New York state;

     5    (C) has operated in the state  for  no  more  than  seven  consecutive
     6  years; and
     7    (D)  has  received  no  more  than  two million dollars in investments
     8  eligible for the credit described in this subsection from  one  or  more
     9  than one angel investor;
    10    (ii)  "Angel investor" shall mean an accredited investor as defined in
    11  rule 501 of regulation D of the  Federal  Securities  Act  of  1933,  as
    12  amended; but shall not include:
    13    (A)  an  investor who controls fifty percent or more of the qualifying
    14  business receiving the investment subject to  the  credit  described  by
    15  this subsection; or
    16    (B)  a  venture  capital company or any bank, savings and loan associ-

    17  ation, trust, insurance company or similar entity, whose normal business
    18  activities include venture capital investment.
    19    § 2. Section 210 of the tax law is amended by adding a new subdivision
    20  45 to read as follows:
    21    45. Angel investor credit. (a) Allowance of credit. A taxpayer, who is
    22  an angel investor, as defined by subparagraph (ii) of paragraph  (c)  of
    23  this  subdivision,  shall be allowed a credit, to be computed as herein-
    24  after provided, against the tax imposed by this article,  for  investing
    25  twenty-five  thousand  dollars  or  more in a qualifying business.   The
    26  amount of the credit shall be twenty-five percent of the  investment  in
    27  the  qualifying business up to but not exceeding two hundred fifty thou-
    28  sand dollars.

    29    (b) Application of credit. The credit allowed under  this  subdivision
    30  for  any taxable year shall not reduce the tax due for such year to less
    31  than the higher amount prescribed in paragraphs (c) and (d) of  subdivi-
    32  sion one of this section. However, if the amount of credit allowed under
    33  this  subdivision  for  any taxable year reduces the tax to such amount,
    34  any amount of credit thus not deductible in such  taxable  year  may  be
    35  carried over to the following year or years and may be deducted from the
    36  taxpayer's tax for such year or years.
    37    (c) Definitions. For purposes of the credit described in this subdivi-
    38  sion:
    39    (i)  "Qualifying business" shall mean a business enterprise, including

    40  a sole proprietorship, partnership or corporation that:
    41    (A) has not yet generated revenue or has gross  revenues,  along  with
    42  the  gross revenues of its affiliates and related members, not exceeding
    43  one million dollars for the taxable year immediately preceding the  year
    44  the taxpayer is allowed a credit under this subdivision. For purposes of
    45  this paragraph, the term "related member" shall have the same meaning as
    46  set forth in clauses (A) and (B) of subparagraph one of paragraph (o) of
    47  subdivision  nine  of section two hundred eight of this chapter, and the
    48  term "affiliates" shall mean those corporations that are members of  the
    49  same affiliated group (as defined in section fifteen hundred four of the
    50  internal revenue code) as the taxpayer;

    51    (B)  has  no  more  than  twenty-five full-time employees, of which at
    52  least sixty percent are employed in New York state;
    53    (C) has operated in the state  for  no  more  than  seven  consecutive
    54  years; and

        A. 9958                             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 (xxxiv) to read as
    15  follows:
 
    16    (xxxiv) Angel investor credit         Amount of credit under
    17    under subsection (uu)                 subdivision forty-five of
    18                                          section two hundred ten
 
    19    § 4. This act  shall  take  effect  immediately  and  shall  apply  to

    20  personal income taxable years beginning on and after January 1, 2013.
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