15E.43 - INVESTMENT TAX CREDITS.
15E.43 INVESTMENT TAX CREDITS.
1. a. For tax years beginning on or after January 1, 2002, a
tax credit shall be allowed against the taxes imposed in chapter 422,
divisions II, III, and V, and in chapter 432, and against the moneys
and credits tax imposed in section 533.329, for a portion of a
taxpayer's equity investment, as provided in subsection 2, in a
qualifying business or a community-based seed capital fund. An
individual may claim a tax credit under this paragraph of a
partnership, limited liability company, S corporation, estate, or
trust electing to have income taxed directly to the individual. The
amount claimed by the individual shall be based upon the pro rata
share of the individual's earnings from the partnership, limited
liability company, S corporation, estate, or trust.
b. A tax credit shall be allowed only for an investment made
in the form of cash to purchase equity in a qualifying business or in
a community-based seed capital fund. A taxpayer shall not claim the
tax credit prior to the third tax year following the tax year in
which the investment is made. Any tax credit in excess of the
taxpayer's liability for the tax year may be credited to the tax
liability for the following five years or until depleted, whichever
is earlier. A tax credit shall not be carried back to a tax year
prior to the tax year in which the taxpayer redeems the tax credit.
c. In the case of a tax credit allowed against the taxes
imposed in chapter 422, division II, where the taxpayer died prior to
redeeming the entire tax credit, the remaining credit can be redeemed
on the decedent's final income tax return.
2. A tax credit shall equal twenty percent of the taxpayer's
equity investment. The maximum amount of a tax credit for an
investment by an investor in any one qualifying business shall be
fifty thousand dollars. Each year, an investor and all affiliates of
the investor shall not claim tax credits under this section for more
than five different investments in five different qualifying
businesses.
3. An investment shall be deemed to have been made on the same
date as the date of acquisition of the equity interest as determined
by the Internal Revenue Code. An investment made prior to January 1,
2002, shall not qualify for a tax credit under this division.
4. The aggregate amount of tax credits issued pursuant to this
division shall not exceed a total of ten million dollars. The total
amount of tax credits issued during the fiscal year beginning July 1,
2002, shall not exceed three million dollars. The total amount of
tax credits issued during the fiscal year beginning July 1, 2003,
shall not exceed three million dollars. The total amount of tax
credits issued during the fiscal year beginning July 1, 2004, shall
not exceed four million dollars. Any amount of the maximum aggregate
limit of tax credits that have not been issued by June 30, 2005, may
be issued in any subsequent fiscal year. Not more than three million
dollars of tax credits may be issued in any one subsequent fiscal
year.
5. A tax credit shall not be redeemed during any tax year
beginning prior to January 1, 2005. A tax credit shall not be
transferable to any other taxpayer.
6. The board shall develop a system for registration and
authorization of tax credits authorized pursuant to this division and
shall control distribution of all tax credits distributed to
investors pursuant to this division. The board shall develop rules
for the qualification and administration of qualifying businesses and
community-based seed capital funds. The department of revenue shall
adopt these criteria as administrative rules and any other rules
pursuant to chapter 17A necessary for the administration of this
division.
7. The board may cooperate with the small business development
centers in an effort to disseminate information regarding the
availability of tax credits for investments in qualifying businesses
under this division. The board may also cooperate with the small
business development centers to develop a standard seed capital
application form that the small business development centers may
submit to the board on behalf of clients seeking seed capital. The
board shall distribute copies of the application forms to all
community-based seed capital funds and potential individual
investors. Section History: Recent Form
2002 Acts, ch 1006, §3, 13; 2002 Acts, ch 1175, §76; 2003 Acts, ch
145, §286; 2003 Acts, ch 179, §96, 97, 159; 2004 Acts, ch 1148, §2,
7; 2005 Acts, ch 157, §1; 2007 Acts, ch 174, §83
Referred to in § 15E.44, 15E.45, 422.11F, 422.33, 422.60, 432.12C,
533.329