The new Angel investment tax credit is a nonrefundable credit that is available for tax years 2011 through 2016. The maximum amount of each investment that may be used to calculate the credit is 25% of each qualified investment (up to $2 million) made directly in a qualified new business venture. The aggregate amount of credit for qualified investments that can be claimed is $10 million per calendar year. Any amount that cannot be used in the year it is claimed may be carried forward for five years.
The Angel investment tax credit can be claimed by businesses, including a corporation, partnership, LLC, as well as by individuals that make an investment in a qualified new business venture.
• A qualified business venture is a business that is registered with the Department of Commerce and Economic Opportunity (DCEO) and that meets the following requirements:
o is headquartered in Illinois,
o at least 51% of its employees must work in Illinois,
o increases jobs and/or capital investment in Illinois,
o is principally engaged in either innovation in certain industries (e.g., manufacturing, clean energy) or undertakes research and development of new products, processes, or services that rely on the application of proprietary technology,
o is not principally engaged in development of real estate, insurance, banking, lending, lobbying, political consulting, professional services, wholesale or retail trade, leisure, hospitality, transportation, and most construction activities,
o has less than 100 employees,
o did not operate in Illinois for more than 10 consecutive years prior to certification, and
o has not received more than $10 million in aggregate private equity investment in cash or $4 million in investments that qualified for tax credits.
• The credit cannot be claimed if a related entity or individual has a direct or indirect ownership interest of at least 51% of the new business venture investment.
• The credit is subject to recapture if the investment is held for less than 3 years or is moved out of state within 3 years. The Department of Commerce and Economic Opportunity must certify applicants annually to show that the investment was made and remains in the business for at least 3 years.
• By March 1 of each year, the Illinois Department of Revenue will issue a report on the credit certifications that have been awarded for the prior year including:
o The name of the applicant and the amount of credit awarded
o The name and address of the qualified new business venture that gave rise to the credit, and
o The date of approval of the application for the tax credit certificate.