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

                                  7160

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                               May 3, 2013
                               ___________

Introduced  by  M.  of  A.  ROSENTHAL  --  read once and referred to the
  Committee on Ways and Means

AN ACT to amend the tax law, in relation to  the  establishment  of  the
  angel  investment  tax  credit for qualified emerging technologies; to
  repeal certain provisions of such law relating thereto; and  providing
  for the repeal of such provisions upon expiration thereof

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision 12-F of section 210 of the tax law is  REPEALED
and a new subdivision 12-F is added to read as follows:
  12-F. ANGEL INVESTMENT TAX CREDIT. (A) FOR THE PURPOSES OF THIS SUBDI-
VISION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:
  (1)  "QUALIFIED  EMERGING  TECHNOLOGY  COMPANY"  SHALL  MEAN A PRIVATE
COMPANY AS DEFINED IN SUBPARAGRAPH ONE OF PARAGRAPH (C)  OF  SUBDIVISION
ONE OF SECTION THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW.
  (2)  "SEED COMPANY" SHALL MEAN A QUALIFIED EMERGING TECHNOLOGY COMPANY
WITH ANNUAL REVENUE OF LESS THAN FIVE MILLION  DOLLARS  OR  A  QUALIFIED
EMERGING  TECHNOLOGY  COMPANY  THAT  MAY  NOT YET HAVE FULLY ESTABLISHED
COMMERCIAL OPERATIONS TO ENABLE SUCH  COMPANY  TO  CONDUCT  RESEARCH  TO
PROVE A CONCEPT.
  (3) "QUALIFIED ANGEL INVESTMENT" SHALL MEAN THE INVESTMENT OF MONEY IN
A  SEED  COMPANY  IN  EXCHANGE FOR ORIGINAL ISSUE CAPITAL STOCK OR OTHER
OWNERSHIP INTEREST,  PROVIDED,  THAT  REPAYMENT  OF  THE  INVESTMENT  IS
DEPENDENT  ON  THE SUCCESS OF THE BUSINESS OPERATIONS AND IS NOT SECURED
BY A LIEN ON BUSINESS ASSETS OR A PERSONAL  GUARANTY  OF  ANY  PRINCIPAL
OWNER,  AND PROVIDED, FURTHER, THAT SUCH INVESTMENT IS NOT MADE BY OR ON
BEHALF OF AN OWNER OF THE BUSINESS, INCLUDING, BUT  NOT  LIMITED  TO,  A
STOCKHOLDER,  PARTNER  OR  SOLE  PROPRIETOR,  OR  ANY  RELATED PERSON AS
DEFINED IN SECTION 465(B)(3)(C) OF THE INTERNAL REVENUE CODE.
  (4) "QUALIFIED ANGEL NETWORK FUND INVESTMENT" SHALL MEAN THE AMOUNT OF
COMMITTED CAPITAL A LIMITED PARTNER HAS ACTUALLY TRANSFERRED TO  A  SEED

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10512-01-3
              

A. 7160                             2

CAPITAL  FUND  PROVIDED,  THAT  SUCH FUND WAS ESTABLISHED SOLELY TO MAKE
QUALIFIED ANGEL INVESTMENTS.
  (B)  A  TAXPAYER  SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY
THIS ARTICLE. THE AMOUNT OF THE CREDIT SHALL BE EQUAL TO THE SUM OF  THE
AMOUNTS SPECIFIED IN SUBPARAGRAPHS ONE AND TWO OF THIS PARAGRAPH.
  (1) FORTY PERCENT OF A QUALIFIED ANGEL INVESTMENT, PROVIDED THAT TWEN-
TY PERCENT OF THE QUALIFIED ANGEL INVESTMENT CAN BE TAKEN AS A CREDIT IN
THE TAXABLE YEAR IN WHICH THE INVESTMENT WAS MADE AND TEN PERCENT OF THE
QUALIFIED  ANGEL INVESTMENT CAN BE TAKEN AS A CREDIT IN EACH OF THE NEXT
TWO TAXABLE YEARS, AND FURTHER PROVIDED  THAT  SUCH  INVESTMENT  IS  NOT
SOLD,  TRANSFERRED  OR  OTHERWISE  RECOVERED  BY THE TAXPAYER DURING THE
TAXABLE YEAR THE INVESTMENT WAS MADE OR WITHIN TWENTY-FOUR  MONTHS  FROM
THE CLOSE OF THE TAXABLE YEAR IN WHICH THE CREDIT WAS FIRST CLAIMED. THE
TOTAL  AMOUNT OF CREDITS ALLOWABLE TO A TAXPAYER UNDER THIS SUBPARAGRAPH
FOR ALL YEARS IS SIX HUNDRED THOUSAND DOLLARS.
  (2) TWENTY PERCENT OF  A  QUALIFIED  ANGEL  NETWORK  FUND  INVESTMENT,
PROVIDED  THAT TEN PERCENT OF THE QUALIFIED ANGEL FUND INVESTMENT CAN BE
TAKEN AS A CREDIT IN THE TAXABLE YEAR IN WHICH THE INVESTMENT  WAS  MADE
AND  FIVE  PERCENT OF THE QUALIFIED ANGEL NETWORK FUND INVESTMENT CAN BE
TAKEN AS A CREDIT IN EACH OF THE NEXT TWO  TAXABLE  YEARS,  AND  FURTHER
PROVIDED  THAT  SUCH  INVESTMENT  IS  NOT SOLD, TRANSFERRED OR OTHERWISE
RECOVERED BY THE TAXPAYER DURING THE TAXABLE  YEAR  THE  INVESTMENT  WAS
MADE  OR WITHIN TWENTY-FOUR MONTHS FROM THE CLOSE OF THE TAXABLE YEAR IN
WHICH THE CREDIT WAS FIRST CLAIMED. THE TOTAL AMOUNT OF  CREDITS  ALLOW-
ABLE  TO  A  TAXPAYER  UNDER  THIS  SUBPARAGRAPH  FOR ALL YEARS IS THREE
HUNDRED THOUSAND DOLLARS.
  (C) IN NO EVENT SHALL THE CREDIT AND CARRYOVER OF SUCH CREDIT  ALLOWED
UNDER  THIS  SUBDIVISION  FOR ANY TAXABLE YEAR, IN THE AGGREGATE, REDUCE
THE TAX DUE FOR SUCH YEAR  TO  LESS  THAN  THE  HIGHER  OF  THE  AMOUNTS
PRESCRIBED IN PARAGRAPHS (C) AND (D) OF SUBDIVISION ONE OF THIS SECTION.
PROVIDED, HOWEVER, IF THE AMOUNT OF CREDIT OR CARRYOVERS OF SUCH CREDIT,
OR BOTH, ALLOWED UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE
TAX  TO  SUCH AMOUNT, OR IF ANY PART OF THE CREDIT OR CARRYOVERS OF SUCH
CREDIT MAY NOT BE DEDUCTED FROM THE TAX OTHERWISE DUE BY REASON  OF  THE
FINAL  SENTENCE OF THIS PARAGRAPH, ANY AMOUNT OF CREDIT OR CARRYOVERS OF
SUCH CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED OVER
TO THE FOLLOWING YEAR OF YEARS AND MAY BE DEDUCTED FROM THE TAX FOR SUCH
YEAR OR YEARS. IN ADDITION, THE AMOUNT OF SUCH CREDIT, AND CARRYOVERS OF
SUCH CREDIT TO THE TAXABLE YEAR, DEDUCTED FROM THE TAX OTHERWISE DUE MAY
NOT, IN THE AGGREGATE, EXCEED FIFTY PERCENT OF  THE  TAX  IMPOSED  UNDER
SECTION  TWO HUNDRED NINE OF THIS ARTICLE COMPUTED WITHOUT REGARD TO ANY
CREDIT PROVIDED FOR BY THIS SECTION.
  (D) WHERE A TAXPAYER  SELLS,  TRANSFERS,  OR  OTHERWISE  RECOVERS  THE
INVESTMENT,  IN  WHOLE OR IN PART, WHICH WAS THE BASIS FOR THE ALLOWANCE
OF CREDIT PROVIDED FOR UNDER SUBPARAGRAPHS ONE OR TWO OF  PARAGRAPH  (B)
OF  THIS SUBDIVISION, DURING THE TAXABLE YEAR THE INVESTMENT WAS MADE OR
WITHIN TWENTY-FOUR MONTHS FROM THE CLOSE OF THE TAXABLE  YEAR  IN  WHICH
THE  CREDIT  WAS  FIRST  CLAIMED,  THE TAXPAYER SHALL NOT BE ALLOWED THE
PORTION OF THE CREDIT ATTRIBUTABLE TO SUCH INVESTMENT  WITH  RESPECT  TO
THE  TAXABLE YEAR IN WHICH THE RECOVERY DESCRIBED ABOVE OCCURRED AND THE
FOLLOWING TAXABLE YEARS.
  S 2. Subsection (r) of section 606 of the tax law is  REPEALED  and  a
new subsection (r) is added to read as follows:
  (R)  ANGEL  INVESTMENT  TAX  CREDIT.  (1)  FOR  THE  PURPOSES  OF THIS
SUBSECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:

A. 7160                             3

  (A) "QUALIFIED EMERGING  TECHNOLOGY  COMPANY"  SHALL  MEAN  A  PRIVATE
COMPANY  AS  DEFINED IN SUBPARAGRAPH ONE OF PARAGRAPH (C) OF SUBDIVISION
ONE OF SECTION THIRTY-ONE HUNDRED TWO-E OF THE PUBLIC AUTHORITIES LAW.
  (B)  "SEED COMPANY" SHALL MEAN A QUALIFIED EMERGING TECHNOLOGY COMPANY
WITH ANNUAL REVENUE OF LESS THAN FIVE MILLION  DOLLARS  OR  A  QUALIFIED
EMERGING  TECHNOLOGY  COMPANY  THAT  MAY  NOT YET HAVE FULLY ESTABLISHED
COMMERCIAL OPERATIONS TO ENABLE SUCH  COMPANY  TO  CONDUCT  RESEARCH  TO
PROVE A CONCEPT.
  (C) "QUALIFIED ANGEL INVESTMENT" SHALL MEAN THE INVESTMENT OF MONEY IN
A  SEED  COMPANY  IN  EXCHANGE FOR ORIGINAL ISSUE CAPITAL STOCK OR OTHER
OWNERSHIP INTEREST, PROVIDED THAT REPAYMENT OF THE INVESTMENT IS DEPEND-
ENT ON THE SUCCESS OF THE BUSINESS OPERATIONS AND IS NOT  SECURED  BY  A
LIEN  ON  BUSINESS ASSETS OR A PERSONAL GUARANTY OF ANY PRINCIPAL OWNER,
AND PROVIDED FURTHER THAT SUCH INVESTMENT IS NOT MADE BY OR ON BEHALF OF
AN OWNER OF THE BUSINESS, INCLUDING, BUT NOT LIMITED TO, A  STOCKHOLDER,
PARTNER  OR SOLE PROPRIETOR, OR ANY RELATED PERSON AS DEFINED IN SECTION
465(B)(3)(C) OF THE INTERNAL REVENUE CODE.
  (D) "QUALIFIED ANGEL NETWORK FUND INVESTMENT" SHALL MEAN THE AMOUNT OF
COMMITTED CAPITAL A LIMITED PARTNER HAS ACTUALLY TRANSFERRED TO  A  SEED
CAPITAL  FUND,  PROVIDED  THAT  SUCH FUND WAS ESTABLISHED SOLELY TO MAKE
QUALIFIED ANGEL INVESTMENTS.
  (2) A TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE  TAX  IMPOSED  BY
THIS  ARTICLE. THE AMOUNT OF THE CREDIT SHALL BE EQUAL TO THE SUM OF THE
AMOUNTS SPECIFIED IN SUBPARAGRAPHS (A) AND (B) OF THIS PARAGRAPH.
  (A) FORTY PERCENT OF A QUALIFIED ANGEL INVESTMENT, PROVIDED THAT TWEN-
TY PERCENT OF THE QUALIFIED ANGEL INVESTMENT CAN BE TAKEN AS A CREDIT IN
THE TAXABLE YEAR IN WHICH THE INVESTMENT WAS MADE AND TEN PERCENT OF THE
QUALIFIED ANGEL INVESTMENT CAN BE TAKEN AS A CREDIT IN EACH OF THE  NEXT
TWO  TAXABLE  YEARS,  AND  FURTHER  PROVIDED THAT SUCH INVESTMENT IS NOT
SOLD, TRANSFERRED OR OTHERWISE RECOVERED  BY  THE  TAXPAYER  DURING  THE
TAXABLE  YEAR  THE INVESTMENT WAS MADE OR WITHIN TWENTY-FOUR MONTHS FROM
THE CLOSE OF THE TAXABLE YEAR IN WHICH THE CREDIT WAS FIRST CLAIMED. THE
TOTAL AMOUNT OF CREDITS ALLOWABLE TO A TAXPAYER UNDER THIS  SUBPARAGRAPH
FOR ALL YEARS IS SIX HUNDRED THOUSAND DOLLARS.
  (B)  TWENTY  PERCENT  OF  A  QUALIFIED  ANGEL NETWORK FUND INVESTMENT,
PROVIDED THAT TEN PERCENT OF THE QUALIFIED ANGEL NETWORK FUND INVESTMENT
CAN BE TAKEN AS A CREDIT IN THE TAXABLE YEAR IN WHICH THE THE INVESTMENT
WAS MADE AND FIVE PERCENT OF THE QUALIFIED ANGEL NETWORK FUND INVESTMENT
CAN BE TAKEN AS A CREDIT IN EACH OF THE  NEXT  TWO  TAXABLE  YEARS,  AND
FURTHER PROVIDED THAT SUCH INVESTMENT IS NOT SOLD, TRANSFERRED OR OTHER-
WISE  RECOVERED  BY  THE TAXPAYER DURING THE TAXABLE YEAR THE INVESTMENT
WAS MADE OR WITHIN TWENTY-FOUR MONTHS FROM THE CLOSE OF THE TAXABLE YEAR
IN WHICH THE CREDIT WAS FIRST  CLAIMED.  THE  TOTAL  AMOUNT  OF  CREDITS
ALLOWABLE  TO  A TAXPAYER UNDER THIS SUBPARAGRAPH FOR ALL YEARS IS THREE
HUNDRED THOUSAND DOLLARS.
  (3) (A) IF THE AMOUNT OF THE CREDIT  AND  CARRYOVERS  OF  SUCH  CREDIT
ALLOWED  UNDER  THIS  SUBSECTION  FOR  ANY TAXABLE YEAR SHALL EXCEED THE
TAXPAYER'S TAX FOR SUCH YEAR, ANY AMOUNT OF CREDIT OR CARRYOVERS OF SUCH
CREDIT THUS NOT DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED  OVER  TO
THE  FOLLOWING  YEAR  OR YEARS AND MAY BE DEDUCTED FROM THE TAX FOR SUCH
YEAR OR YEARS. IN ADDITION, THE AMOUNT OF SUCH CREDIT, AND CARRYOVERS OF
SUCH CREDIT TO THE TAXABLE YEAR, DEDUCTED FROM THE TAX OTHERWISE DUE MAY
NOT, IN THE AGGREGATE, EXCEED FIFTY PERCENT OF  THE  TAX  IMPOSED  UNDER
SECTION  SIX  HUNDRED ONE OF THIS ARTICLE COMPUTED WITHOUT REGARD TO ANY
CREDIT PROVIDED FOR BY THIS SECTION.

A. 7160                             4

  (B) IN THE CASE OF A HUSBAND OR WIFE WHO IS REQUIRED TO FILE  A  SEPA-
RATE  RETURN,  THE LIMITATIONS PROVIDED FOR IN SUBPARAGRAPH (B) OF PARA-
GRAPH TWO OF THIS SUBSECTION SHALL BE ONE HUNDRED FIFTY THOUSAND DOLLARS
IN LIEU OF THREE HUNDRED THOUSAND DOLLARS, AND THE LIMITATIONS  PROVIDED
FOR  IN  SUBPARAGRAPH  (A)  OF PARAGRAPH TWO OF THIS SUBSECTION SHALL BE
THREE HUNDRED THOUSAND DOLLARS IN LIEU OF SIX HUNDRED THOUSAND  DOLLARS,
UNLESS  THE  SPOUSE  OF  THE TAXPAYER HAS NO CREDIT ALLOWABLE UNDER THIS
SUBSECTION FOR THE TAXABLE YEAR OF SUCH SPOUSE WHICH ENDS WITHIN OR WITH
THE TAXPAYER'S TAXABLE YEAR.
  (C) IN THE CASE OF AN ESTATE OR TRUST, THE LIMITATIONS PROVIDED FOR IN
PARAGRAPH TWO OF THIS SUBSECTION SHALL BE REDUCED  TO  AN  AMOUNT  WHICH
BEARS  THE  SAME  RATIO  TO THREE HUNDRED THOUSAND DOLLARS AND AN AMOUNT
WHICH BEARS THE SAME RATIO  TO  SIX  HUNDRED  THOUSAND  DOLLARS  AS  THE
PORTION  OF  THE INCOME OF THE ESTATE OR TRUST WHICH IS NOT ALLOCATED TO
BENEFICIARIES BEARS TO THE TOTAL INCOME OF THE ESTATE OR TRUST.
  (4) WHERE A TAXPAYER  SELLS,  TRANSFERS,  OR  OTHERWISE  RECOVERS  THE
INVESTMENT,  IN  WHOLE OR IN PART, WHICH WAS THE BASIS FOR THE ALLOWANCE
OF CREDIT PROVIDED FOR UNDER SUBPARAGRAPHS (A) OR (B) OF  PARAGRAPH  TWO
OF  THIS  SUBSECTION, DURING THE TAXABLE YEAR THE INVESTMENT WAS MADE OR
WITHIN TWENTY-FOUR MONTHS FROM THE CLOSE OF THE TAXABLE  YEAR  IN  WHICH
THE  CREDIT  WAS  FIRST  CLAIMED,  THE TAXPAYER SHALL NOT BE ALLOWED THE
PORTION OF CREDIT ATTRIBUTABLE TO SUCH INVESTMENT WITH  RESPECT  TO  THE
TAXABLE  YEAR  IN  WHICH  THE  RECOVERY DESCRIBED ABOVE OCCURRED AND THE
FOLLOWING TAXABLE YEARS.
  S 3. Clause (xi) of subparagraph (B) of paragraph 1 of subsection  (i)
of  section  606  of the tax law, as amended by section 7 of part C-1 of
chapter 57 of the laws of 2009, is amended to read as follows:
(xi) [Qualified emerging technology  Qualified investments under
company capital] ANGEL INVESTMENT    subdivision twelve-F
tax credit under subsection (r)      of section two hundred ten
  S 4. This act shall take effect immediately and shall apply to taxable
years beginning on and after January 1, 2014 and shall remain in  effect
until  December 31, 2019, when upon such date the provisions of this act
shall expire and be deemed repealed.