STATE OF NEW YORK ________________________________________________________________________ 4090 2021-2022 Regular Sessions IN ASSEMBLY February 1, 2021 ___________ Introduced by M. of A. RODRIGUEZ, BICHOTTE HERMELYN -- Multi-Sponsored by -- M. of A. THIELE -- read once and referred to the Committee 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 (kkk) to read as follows: 3 (kkk) 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 EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD03162-01-1

A. 4090 2 1 set forth in clauses (A) and (B) of subparagraph one of paragraph (o) of 2 subdivision nine of section two hundred eight of this chapter, and the 3 term "affiliates" shall mean those corporations that are members of the 4 same affiliated group (as defined in section fifteen hundred four of the 5 internal revenue code) as the taxpayer; 6 (B) has no more than twenty-five full-time employees, of which at 7 least sixty percent are employed in New York state; 8 (C) has operated in the state for no more than seven consecutive 9 years; and 10 (D) has received no more than two million dollars in investments 11 eligible for the credit described in this subsection from one or more 12 than one angel investor; 13 (ii) "Angel investor" shall mean an accredited investor as defined in 14 rule 501 of regulation D of the Federal Securities Act of 1933, as 15 amended; but shall not include: 16 (A) an investor who controls fifty percent or more of the qualifying 17 business receiving the investment subject to the credit described by 18 this subsection; or 19 (B) a venture capital company or any bank, savings and loan associ- 20 ation, trust, insurance company or similar entity, whose normal business 21 activities include venture capital investment. 22 § 2. Section 210-B of the tax law is amended by adding a new subdivi- 23 sion 55 to read as follows: 24 55. Angel investor credit. (a) Allowance of credit. A taxpayer, who is 25 an angel investor, as defined by subparagraph (ii) of paragraph (c) of 26 this subdivision, shall be allowed a credit, to be computed as herein- 27 after provided, against the tax imposed by this article, for investing 28 twenty-five thousand dollars or more in a qualifying business. The 29 amount of the credit shall be twenty-five percent of the investment in 30 the qualifying business up to but not exceeding two hundred fifty thou- 31 sand dollars. 32 (b) Application of credit. The credit allowed under this subdivision 33 for any taxable year shall not reduce the tax due for such year to less 34 than the amount prescribed in paragraph (d) of subdivision one of 35 section two hundred ten of this article. However, if the amount of 36 credit allowed under this subdivision for any taxable year reduces the 37 tax to such amount, any amount of credit thus not deductible in such 38 taxable year may be carried over to the following year or years and may 39 be deducted from the taxpayer's tax for such year or years. 40 (c) Definitions. For purposes of the credit described in this subdivi- 41 sion: 42 (i) "Qualifying business" shall mean a business enterprise, including 43 a sole proprietorship, partnership or corporation that: 44 (A) has not yet generated revenue or has gross revenues, along with 45 the gross revenues of its affiliates and related members, not exceeding 46 one million dollars for the taxable year immediately preceding the year 47 the taxpayer is allowed a credit under this subdivision. For purposes of 48 this paragraph, the term "related member" shall have the same meaning as 49 set forth in clauses (A) and (B) of subparagraph one of paragraph (o) of 50 subdivision nine of section two hundred eight of this article, and the 51 term "affiliates" shall mean those corporations that are members of the 52 same affiliated group (as defined in section fifteen hundred four of the 53 internal revenue code) as the taxpayer; 54 (B) has no more than twenty-five full-time employees, of which at 55 least sixty percent are employed in New York state;

A. 4090 3 1 (C) has operated in the state for no more than seven consecutive 2 years; and 3 (D) has received no more than two million dollars in investments 4 eligible for the credit described in this subdivision from one or more 5 than one angel investor; 6 (ii) "Angel investor" shall mean an accredited investor as defined in 7 rule 501 of regulation D of the Federal Securities Act of 1933, as 8 amended; but shall not include: 9 (A) an investor who controls fifty percent or more of the qualifying 10 business receiving the investment subject to the credit described by 11 this subdivision; or 12 (B) a venture capital company or any bank, savings and loan associ- 13 ation, trust, insurance company or similar entity, whose normal business 14 activities include venture capital investment. 15 § 3. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 16 of the tax law is amended by adding a new clause (xlvi) to read as 17 follows: 18 (xlvi) Angel investor credit Amount of credit under 19 under subsection (kkk) subdivision fifty-five of 20 section two hundred ten-B 21 § 4. This act shall take effect immediately and shall apply to 22 personal income taxable years beginning on and after January 1, 2022.

Provides for an angel investor income tax credit

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