§ 5930v - Angel venture capital credit - Vermont Statutes

§ 5930v. Angel venture capital credit

(a) A qualified taxpayer of this state shall be eligible for a credit of three percent of capital gain income from an eligible venture capital investment under this section made by the taxpayer during the taxable year. If the taxpayer is a partnership, limited liability company, or S corporation, the treatment of capital gain income under this section shall be allocated ratably among the partners, members, or shareholders of the entity.

(b) In this section:

(1) "Advanced technologies" means any technology that may be used to perform a new function or an existing function in an improved fashion and which is significantly different from currently commonly used technologies.

(2) "At-risk debt" means debt which is not secured, is not guaranteed by a substantial owner of the business, will not be repaid for at least five years, or bears a reasonable rate of interest.

(3) "Eligible venture capital investment" means at least $50,000.00 and up to $200,000.00 of total investment by one person, which is equity or at-risk debt investment in one qualified business, for expenditure by the qualified business on the plant, equipment, research, and development or as working capital in Vermont.

(4) "Qualified business" means a business which:

(A) has its principal place of business in this state;

(B) had in the year preceding the investment annual gross sales of $3,000,000.00 or less; and

(C) which:

(i) is primarily engaged in the creation or production of tangible personal property for sale;

(ii) is primarily engaged in development or application of advanced technologies; or

(iii) provides a product or service that is or will be sold or provided predominantly outside the state.

(5) "Qualified taxpayer" means a taxpayer who is not a substantial owner of the qualified business.

(6) "Substantial owner" means a person who, after the investment, has greater than 25 percent ownership interest in the qualified business, including attribution of ownership interests of the individual's spouse, parents, spouse's parents, siblings, and children; or is a person who is controlled by, or has actual control of, the qualified business through any combination of ownership and management. (Added 2003, No. 67, § 24; amended 2005, No. 207 (Adj. Sess.), § 10, eff. May 31, 2006; 2009, No. 1 (Sp. Sess.), § H.28, eff. June 2, 2009.)