S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7033
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                               May 17, 2023
                                ___________
 
 Introduced  by  Sen.  CLEARE -- read twice and ordered printed, and when
   printed to be committed to the Committee on Budget and Revenue
 
 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 (ppp) to read as follows:
   (PPP)  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
 SET FORTH IN CLAUSES (A) AND (B) OF SUBPARAGRAPH ONE OF PARAGRAPH (O) OF
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11455-01-3
              

 S. 7033                             2
 
 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.
   § 2. Section 210-B of the tax law is amended by adding a new  subdivi-
 sion 60 to read as follows:
   60. 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  AMOUNT  PRESCRIBED  IN  PARAGRAPH  (D)  OF SUBDIVISION ONE OF
 SECTION TWO HUNDRED TEN OF THIS ARTICLE.   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 ARTICLE,  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
 S. 7033                             3
 
   (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.
   § 3. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
 of  the  tax  law  is  amended  by  adding  a new clause (li) to read as
 follows:
 
 (LI) ANGEL INVESTOR CREDIT              AMOUNT OF CREDIT UNDER
 UNDER SUBSECTION (PPP)                  SUBDIVISION SIXTY OF
                                         SECTION TWO HUNDRED TEN-B
 
   § 4. This act  shall  take  effect  immediately  and  shall  apply  to
 personal income taxable years beginning on and after January 1, 2024.