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

                                   305

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 7, 2015
                               ___________

Introduced  by  M. of A. ROSENTHAL, MORELLE, MAGNARELLI -- 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 Subdivision 8 of section 210-B of the tax law  is  REPEALED
and a new subdivision 8 is added to read as follows:
  8.  ANGEL INVESTMENT TAX CREDIT. (A) FOR THE PURPOSES OF THIS SUBDIVI-
SION, 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.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04229-01-5
              

A. 305                              2

  (4) "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.
  (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 SECTION TWO
HUNDRED TEN OF THIS ARTICLE.  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 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 TWO HUNDRED NINE
OF THIS ARTICLE COMPUTED WITHOUT REGARD TO ANY CREDIT  PROVIDED  FOR  BY
SECTION TWO HUNDRED TEN OF THIS ARTICLE.
  (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:

A. 305                              3

  (R) ANGEL  INVESTMENT  TAX  CREDIT.  (1)  FOR  THE  PURPOSES  OF  THIS
SUBSECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:
  (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

A. 305                              4

SECTION  SIX  HUNDRED ONE OF THIS ARTICLE COMPUTED WITHOUT REGARD TO ANY
CREDIT PROVIDED FOR BY THIS SECTION.
  (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 68  of  part  A  of
chapter 59 of the laws of 2014, is amended to read as follows:
(xi) [Qualified emerging technology  Qualified investments under
company capital] ANGEL INVESTMENT    subdivision eight
tax credit under subsection (r)      of section two hundred ten-B
  S 4. This act shall take effect immediately and shall apply to taxable
years  beginning  on  and after the first of january next succeeding the
date on which it shall have become a law and shall remain in effect  for
sixty  months  after it shall have become a law, when upon such date the
provisions of this act shall expire and be deemed repealed.