S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    991
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 10, 2017
                                ___________
 
 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 Subdivision 8 of section 210-B of the tax law  is  REPEALED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.
   (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.
              

                                                            LBD04941-01-7

 A. 991                              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 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.
   §  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. 991                              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. 991                              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.
   § 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
   § 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.