§ 105-163.011. Tax credits allowed. - North Carolina Statutes

§ 105‑163.011.  Taxcredits allowed.

(a)        No Credit forBrokered Investments. – No credit is allowed under this section for a purchaseof equity securities or subordinated debt if a broker's fee or commission orother similar remuneration is paid or given directly or indirectly forsoliciting the purchase.

(b)        (Effective fortaxable years beginning before January 1, 2009) Individuals. – Subject tothe limitations contained in G.S. 105‑163.012, an individual whopurchases the equity securities or subordinated debt of a qualified businessdirectly from that business is allowed as a credit against the tax imposed byPart 2 of this Article for the taxable year an amount equal to twenty‑fivepercent (25%) of the amount invested. The aggregate amount of credit allowed anindividual for one or more investments in a single taxable year under thisPart, whether directly or indirectly as owner of a pass‑through entity,may not exceed fifty thousand dollars ($50,000). The credit may not be takenfor the year in which the investment is made but shall be taken for the taxableyear beginning during the calendar year in which the application for the creditbecomes effective as provided in subsection (c) of this section.

(b)        (Effective fortaxable years beginning on or after January 1, 2009) Individuals. – Subjectto the limitations contained in G.S. 105‑163.012, an individual whopurchases the equity securities or subordinated debt of a qualified businessdirectly from that business is allowed as a credit against the tax imposed byPart 2 of this Article for the taxable year an amount equal to twenty‑fivepercent (25%) of the amount invested. The aggregate amount of credit allowed anindividual for one or more investments made in a single taxable year under thisPart, whether directly or indirectly as owner of a pass‑through entity,may not exceed fifty thousand dollars ($50,000). The credit may not be takenfor the year in which the investment is made but may be taken for the taxableyear beginning during the calendar year in which the application for the creditbecomes effective as provided in subsection (c) of this section.

(b1)      (Effective fortaxable years beginning before January 1, 2009) Pass‑ThroughEntities. – This subsection does not apply to a pass‑through entity thathas committed capital under management in excess of five million dollars($5,000,000) or to a pass‑through entity that is a qualified business ora North Carolina Enterprise Corporation. Subject to the limitations provided inG.S. 105‑163.012, a pass‑through entity that purchases the equitysecurities or subordinated debt of a qualified business directly from thebusiness is eligible for a tax credit equal to twenty‑five percent (25%)of the amount invested. The aggregate amount of credit allowed a pass‑throughentity for one or more investments in a single taxable year under this Part,whether directly or indirectly as owner of another pass‑through entity,may not exceed seven hundred fifty thousand dollars ($750,000). The pass‑throughentity is not eligible for the credit for the year in which the investment bythe pass‑through entity is made but shall be eligible for the credit forthe taxable year beginning during the calendar year in which the applicationfor the credit becomes effective as provided in subsection (c) of this section.

Each individual who is anowner of a pass‑through entity is allowed as a credit against the taximposed by Part 2 of this Article for the taxable year an amount equal to theowner's allocated share of the credits for which the pass‑through entityis eligible under this subsection. The aggregate amount of credit allowed anindividual for one or more investments in a single taxable year under thisPart, whether directly or indirectly as owner of a pass‑through entity,may not exceed fifty thousand dollars ($50,000).

If an owner's share of thepass‑through entity's credit is limited due to the maximum allowablecredit under this section for a taxable year, the pass‑through entity andits owners may not reallocate the unused credit among the other owners.

(b1)      (Effective fortaxable years beginning on or after January 1, 2009) Pass‑ThroughEntities. – This subsection does not apply to a pass‑through entity thathas committed capital under management in excess of five million dollars ($5,000,000)or to a pass‑through entity that is a qualified business or a NorthCarolina Enterprise Corporation. Subject to the limitations provided in G.S.105‑163.012, a pass‑through entity that purchases the equitysecurities or subordinated debt of a qualified business directly from thebusiness is eligible for a tax credit equal to twenty‑five percent (25%)of the amount invested. The aggregate amount of credit allowed a pass‑throughentity for one or more investments made in a single taxable year under thisPart, whether directly or indirectly as owner of another pass‑throughentity, may not exceed seven hundred fifty thousand dollars ($750,000). Thepass‑through entity is not eligible for the credit for the year in whichthe investment by the pass‑through entity is made but is eligible for thecredit for the taxable year beginning during the calendar year in which theapplication for the credit becomes effective as provided in subsection (c) ofthis section.

Each individual who is anowner of a pass‑through entity is allowed as a credit against the taximposed by Part 2 of this Article for the taxable year an amount equal to theowner's allocated share of the credits for which the pass‑through entityis eligible under this subsection. The aggregate amount of credit allowed anindividual for one or more investments made in a single taxable year under thisPart, whether directly or indirectly as owner of a pass‑through entity,may not exceed fifty thousand dollars ($50,000).

If an owner's share of the pass‑throughentity's credit is limited due to the maximum allowable credit under thissection for a taxable year, the pass‑through entity and its owners maynot reallocate the unused credit among the other owners.

(c)        (Effective fortaxable years beginning before January 1, 2009) Application. – To beeligible for the tax credit provided in this section, the taxpayer must file anapplication for the credit with the Secretary. The application should be filedon or before April 15 of the year following the calendar year in which theinvestment was made. The Secretary may not accept an application filed afterOctober 15 of the year following the calendar year in which the investment wasmade. An application is effective for the year in which it is timely filed. Theapplication shall be on a form prescribed by the Secretary and shall includeany supporting documentation that the Secretary may require. If an investmentfor which a credit is applied for was paid for other than in money, thetaxpayer shall include with the application a certified appraisal of the valueof the property used to pay for the investment. The application for a creditfor an investment made by a pass‑through entity must be filed by the pass‑throughentity.

(c)        (Effective fortaxable years beginning on or after January 1, 2009) Application. – To beeligible for the tax credit provided in this section, the taxpayer must file anapplication for the credit with the Secretary. The application should be filedon or before April 15 of the year following the calendar year in which theinvestment was made. The Secretary may not accept an application filed afterOctober 15 of the year following the calendar year in which the investment wasmade. An application is effective for the year in which it is timely filed. Theapplication must be on a form prescribed by the Secretary and must include anysupporting documentation that the Secretary may require. If an investment forwhich a credit is applied for was paid for other than in money, the taxpayermust include with the application a certified appraisal of the value of theproperty used to pay for the investment. The application for a credit for aninvestment made by a pass‑through entity must be filed by the pass‑throughentity.

(d)        Penalties. – Thepenalties provided in G.S. 105‑236 apply in this Part.  (1987, c. 852, s. 1; 1987(Reg. Sess., 1988), c. 882, ss. 3, 3.1; 1989 (Reg. Sess., 1990), c. 848, s. 3;1991, c. 637, s. 2; 1993, c. 443, s. 2; 1995, c. 491, s. 1; 1996, 2nd Ex.Sess., c. 14, s. 7; 1998‑98, s. 71; 1998‑212, s. 29A.15(a); 1999‑337,s. 27; 2003‑414, s. 3; 2007‑422, s. 2; 2009‑445, s. 9(a).)