HF 1747

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; providing for an income tax credit for investments in
qualified business ventures in Minnesota; amending Minnesota Statutes 2006,
section 290.06, by adding a subdivision.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2006, section 290.06, is amended by adding a
subdivision to read:

new text begin Subd. 34. new text end

new text begin Investment tax credit. new text end

new text begin (a) A credit is allowed against the tax imposed by
this chapter for a qualified taxpayer's investment in a qualified new business venture. The
credit shall equal 25 percent of the taxpayer's investment made in the business, but shall
not exceed the lesser of:
new text end

new text begin (1) the liability for tax under this chapter, including the applicable alternative
minimum tax;
new text end

new text begin (2) $50,000 for an individual not part of a partnership; or
new text end

new text begin (3) $600,000 for a pass-through entity.
new text end

new text begin (b) For purposes of this subdivision, a qualified taxpayer means:
new text end

new text begin (1) an accredited investor within the meaning of Regulation D of the Securities and
Exchange Commission, Code of Federal Regulations, title 17, section 230.501(a), whether
part of a pass-through entity or not; and
new text end

new text begin (2) an accredited investor who does not own, control, or hold power to vote 20
percent or more of the outstanding securities of the qualified business venture in which the
eligible investment is proposed.
new text end

new text begin (c) Pass-through entities and individuals may apply to the commissioner of
employment and economic development for certification as a qualifying pass-through
entity or individual. The application must be in the form and made under the procedures
specified by the commissioner of employment and economic development. In awarding
certificates under this paragraph, the commissioner of employment and economic
development shall award them to qualified applicants in the order in which the applications
are received.
new text end

new text begin (d) Each pass-through entity must provide each investor a statement indicating the
investor's share of the credit amount certified to the pass-through entity under paragraph
(c) based on its share of the pass-through entity's assets. The credit shall not exceed
$50,000 for each individual part of a pass-through entity.
new text end

new text begin (e) If the amount of the credit under this subdivision or any taxable year exceeds the
limitation under paragraph (a), clause (1), the excess shall be a credit carryover to each
of the ten succeeding years but shall not exceed $50,000 for an individual not part of a
partnership and $600,000 for a pass-through entity. The entire amount of the excess
unused credit must be carried first to the earliest of the taxable years to which the credit
may be carried, and then to each successive year to which the credit may be carried. The
amount of the unused credit that may be added under this paragraph may not exceed the
taxpayer's liability for tax less the credit for the taxable year.
new text end

new text begin (f) Unless otherwise provided under the rules of the Department of Employment and
Economic Development, a business is a qualified business venture for purposes of this
subdivision only if the business satisfies all of the following conditions:
new text end

new text begin (1) the business has its headquarters in Minnesota;
new text end

new text begin (2) at least 51 percent of the business's employees are employed in Minnesota;
new text end

new text begin (3) the business is engaged in, or is committed to engage in, manufacturing,
agriculture, processing or assembling products, conducting research and development, or
developing a new product or business process;
new text end

new text begin (4) the business is not engaged in real estate development, insurance, banking,
lending, lobbying, political consulting, wholesale or retail trade, leisure, hospitality,
transportation, construction, or professional services provided by attorneys, accountants,
business consultants, physicians, or health care consultants;
new text end

new text begin (5) the business has less than 100 employees;
new text end

new text begin (6) the business has not been in operation for more than ten consecutive years;
new text end

new text begin (7) the business has not received more than $1,000,000 in investments that have
qualified for and received tax credits under this section;
new text end

new text begin (8) the business has less than $1,000,000 in annual gross sales receipts;
new text end

new text begin (9) the business is not a subsidiary or an affiliate of a business that employs more
than 100 employees or has gross sales receipts for the previous year of more than
$1,000,000, computed by aggregating all of the employees and gross sales receipts of the
business entities affiliated with the business; and
new text end

new text begin (10) the business has not received private equity investments of more than
$2,000,000.
new text end