S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   975

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced by M. of A. KELLNER, LUPARDO -- 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:

  Section  1.  Section  606  of  the  tax law is amended by adding a new
subsection (vv) to read as follows:
  (VV) ANGEL INVESTOR CREDIT. (1) ALLOWANCE OF CREDIT. A  TAXPAYER,  WHO
IS AN ANGEL INVESTOR, AS DEFINED BY SUBPARAGRAPH (II) OF PARAGRAPH THREE
OF THIS SUBSECTION, SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS HEREIN-
AFTER  PROVIDED,  AGAINST THE TAX IMPOSED BY THIS ARTICLE, FOR INVESTING
TWENTY-FIVE THOUSAND DOLLARS OR MORE IN  A  QUALIFYING  BUSINESS.    THE
AMOUNT  OF  THE CREDIT SHALL BE TWENTY-FIVE PERCENT OF THE INVESTMENT IN
THE QUALIFYING BUSINESS UP TO BUT NOT EXCEEDING TWO HUNDRED FIFTY  THOU-
SAND DOLLARS.
  (2)  APPLICATION  OF  CREDIT.  IF THE AMOUNT OF CREDIT ALLOWABLE UNDER
THIS SUBSECTION FOR ANY TAXABLE YEAR SHALL EXCEED THE TAXPAYER'S TAX FOR
SUCH YEAR, THE EXCESS MAY BE CARRIED  OVER  TO  THE  FOLLOWING  YEAR  OR
YEARS,  AND  MAY  BE  DEDUCTED  FROM THE TAXPAYER'S TAX FOR SUCH YEAR OR
YEARS.
  (3)  DEFINITIONS.  FOR  PURPOSES  OF  THE  CREDIT  DESCRIBED  IN  THIS
SUBSECTION:
  (I)  "QUALIFYING BUSINESS" SHALL MEAN A BUSINESS ENTERPRISE, INCLUDING
A SOLE PROPRIETORSHIP, PARTNERSHIP OR CORPORATION THAT:
  (A) HAS NOT YET GENERATED REVENUE OR HAS GROSS  REVENUES,  ALONG  WITH
THE  GROSS REVENUES OF ITS AFFILIATES AND RELATED MEMBERS, NOT EXCEEDING
ONE MILLION DOLLARS FOR THE TAXABLE YEAR IMMEDIATELY PRECEDING THE  YEAR
THE  TAXPAYER IS ALLOWED A CREDIT UNDER THIS SUBSECTION. FOR PURPOSES OF
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.
              

                                                           LBD01895-01-3

A. 975                              2

SET FORTH IN CLAUSES (A) AND (B) OF SUBPARAGRAPH ONE OF PARAGRAPH (O) OF
SUBDIVISION NINE OF SECTION TWO HUNDRED EIGHT OF THIS CHAPTER,  AND  THE
TERM  "AFFILIATES" SHALL MEAN THOSE CORPORATIONS THAT ARE MEMBERS OF THE
SAME AFFILIATED GROUP (AS DEFINED IN SECTION FIFTEEN HUNDRED FOUR OF THE
INTERNAL REVENUE CODE) AS THE TAXPAYER;
  (B)  HAS  NO  MORE  THAN  TWENTY-FIVE FULL-TIME EMPLOYEES, OF WHICH AT
LEAST SIXTY PERCENT ARE EMPLOYED IN NEW YORK STATE;
  (C) HAS OPERATED IN THE STATE  FOR  NO  MORE  THAN  SEVEN  CONSECUTIVE
YEARS; AND
  (D)  HAS  RECEIVED  NO  MORE  THAN  TWO MILLION DOLLARS IN INVESTMENTS
ELIGIBLE FOR THE CREDIT DESCRIBED IN THIS SUBSECTION FROM  ONE  OR  MORE
THAN ONE ANGEL INVESTOR;
  (II)  "ANGEL INVESTOR" SHALL MEAN AN ACCREDITED INVESTOR AS DEFINED IN
RULE 501 OF REGULATION D OF THE  FEDERAL  SECURITIES  ACT  OF  1933,  AS
AMENDED; BUT SHALL NOT INCLUDE:
  (A)  AN  INVESTOR WHO CONTROLS FIFTY PERCENT OR MORE OF THE QUALIFYING
BUSINESS RECEIVING THE INVESTMENT SUBJECT TO  THE  CREDIT  DESCRIBED  BY
THIS SUBSECTION; OR
  (B)  A  VENTURE  CAPITAL COMPANY OR ANY BANK, SAVINGS AND LOAN ASSOCI-
ATION, TRUST, INSURANCE COMPANY OR SIMILAR ENTITY, WHOSE NORMAL BUSINESS
ACTIVITIES INCLUDE VENTURE CAPITAL INVESTMENT.
  S 2. Section 210 of the tax law is amended by adding a new subdivision
46 to read as follows:
  46. ANGEL INVESTOR CREDIT. (A) ALLOWANCE OF CREDIT. A TAXPAYER, WHO IS
AN ANGEL INVESTOR, AS DEFINED BY SUBPARAGRAPH (II) OF PARAGRAPH  (C)  OF
THIS  SUBDIVISION,  SHALL BE ALLOWED A CREDIT, TO BE COMPUTED AS HEREIN-
AFTER PROVIDED, AGAINST THE TAX IMPOSED BY THIS ARTICLE,  FOR  INVESTING
TWENTY-FIVE  THOUSAND  DOLLARS  OR  MORE IN A QUALIFYING BUSINESS.   THE
AMOUNT OF THE CREDIT SHALL BE TWENTY-FIVE PERCENT OF THE  INVESTMENT  IN
THE  QUALIFYING BUSINESS UP TO BUT NOT EXCEEDING TWO HUNDRED FIFTY THOU-
SAND DOLLARS.
  (B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER  THIS  SUBDIVISION
FOR  ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE HIGHER AMOUNT PRESCRIBED IN PARAGRAPHS (C) AND (D) OF  SUBDIVI-
SION ONE OF THIS SECTION. HOWEVER, IF THE AMOUNT OF CREDIT ALLOWED UNDER
THIS  SUBDIVISION  FOR  ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT,
ANY AMOUNT OF CREDIT THUS NOT DEDUCTIBLE IN SUCH  TAXABLE  YEAR  MAY  BE
CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED FROM THE
TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  (C) DEFINITIONS. FOR PURPOSES OF THE CREDIT DESCRIBED IN THIS SUBDIVI-
SION:
  (I)  "QUALIFYING BUSINESS" SHALL MEAN A BUSINESS ENTERPRISE, INCLUDING
A SOLE PROPRIETORSHIP, PARTNERSHIP OR CORPORATION THAT:
  (A) HAS NOT YET GENERATED REVENUE OR HAS GROSS  REVENUES,  ALONG  WITH
THE  GROSS REVENUES OF ITS AFFILIATES AND RELATED MEMBERS, NOT EXCEEDING
ONE MILLION DOLLARS FOR THE TAXABLE YEAR IMMEDIATELY PRECEDING THE  YEAR
THE TAXPAYER IS ALLOWED A CREDIT UNDER THIS SUBDIVISION. FOR PURPOSES OF
THIS PARAGRAPH, THE TERM "RELATED MEMBER" SHALL HAVE THE SAME MEANING AS
SET FORTH IN CLAUSES (A) AND (B) OF SUBPARAGRAPH ONE OF PARAGRAPH (O) OF
SUBDIVISION  NINE  OF SECTION TWO HUNDRED EIGHT OF THIS CHAPTER, AND THE
TERM "AFFILIATES" SHALL MEAN THOSE CORPORATIONS THAT ARE MEMBERS OF  THE
SAME AFFILIATED GROUP (AS DEFINED IN SECTION FIFTEEN HUNDRED FOUR OF THE
INTERNAL REVENUE CODE) AS THE TAXPAYER;
  (B)  HAS  NO  MORE  THAN  TWENTY-FIVE FULL-TIME EMPLOYEES, OF WHICH AT
LEAST SIXTY PERCENT ARE EMPLOYED IN NEW YORK STATE;

A. 975                              3

  (C) HAS OPERATED IN THE STATE  FOR  NO  MORE  THAN  SEVEN  CONSECUTIVE
YEARS; AND
  (D)  HAS  RECEIVED  NO  MORE  THAN  TWO MILLION DOLLARS IN INVESTMENTS
ELIGIBLE FOR THE CREDIT DESCRIBED IN THIS SUBDIVISION FROM ONE  OR  MORE
THAN ONE ANGEL INVESTOR;
  (II)  "ANGEL INVESTOR" SHALL MEAN AN ACCREDITED INVESTOR AS DEFINED IN
RULE 501 OF REGULATION D OF THE  FEDERAL  SECURITIES  ACT  OF  1933,  AS
AMENDED; BUT SHALL NOT INCLUDE:
  (A)  AN  INVESTOR WHO CONTROLS FIFTY PERCENT OR MORE OF THE QUALIFYING
BUSINESS RECEIVING THE INVESTMENT SUBJECT TO  THE  CREDIT  DESCRIBED  BY
THIS SUBDIVISION; OR
  (B)  A  VENTURE  CAPITAL COMPANY OR ANY BANK, SAVINGS AND LOAN ASSOCI-
ATION, TRUST, INSURANCE COMPANY OR SIMILAR ENTITY, WHOSE NORMAL BUSINESS
ACTIVITIES INCLUDE VENTURE CAPITAL INVESTMENT.
  S 3. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
of  the  tax  law  is  amended  by adding a new clause (xxxv) to read as
follows:

  (XXXV) ANGEL INVESTOR CREDIT          AMOUNT OF CREDIT UNDER
  UNDER SUBSECTION (VV)                 SUBDIVISION FORTY-SIX OF
                                        SECTION TWO HUNDRED TEN

  S 4. This act  shall  take  effect  immediately  and  shall  apply  to
personal income taxable years beginning on and after January 1, 2014.