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Venture Capital Investment Tax Credit

 

Description

The Venture Capital Investment Tax Credit was established to improve access to capital to fast growing Indiana companies by providing individual and corporate investors an additional incentive to invest in early stage firms. Investors who provide qualified debt or equity capital to Indiana companies receive a credit against their Indiana income tax liability.

The Venture Capital Investment Tax Credit is established by I.C. 6-3.1-24.

Eligibility

This credit is available to any taxpayer who is an individual or entity that has any state tax liability. Pass through entities whose shareholders have Indiana income tax liabilities are also eligible for the credit. A taxpayer wishing to obtain a credit for investing in a qualified Indiana business must apply to the IEDC for a certification that the proposed investment plan would qualify for a credit. The total amount of tax credits certified by the IEDC for any calendar year may not exceed twelve and a half million dollars ($12,500,000).

Upon certification, the taxpayer must provide qualified investment capital to a qualified Indiana business according to the taxpayer's certified investment plan within two (2) years after the date on which the IEDC certifies the investment plan.

After a taxpayer makes the investment, the taxpayer must submit proof of investment to the IEDC from which the IEDC shall issue the taxpayer a letter indicating that the taxpayer is entitled to a tax credit.

Certification Process for Qualified Indiana Businesses

Indiana businesses that desire to be certified by IEDC as qualified Indiana businesses for purposes of the VCI Tax Credit must submit a Venture Capital Investment Tax Credit Application to IEDC.

Additionally, a non-refundable application fee in the amount of Two Hundred Dollars ($200.00) must accompany the application at the time of its submittal to IEDC.  Checks or money orders must be payable to the “Indiana Economic Development Corporation”.

Upon the completion of IEDC’s review of the application, and the submittals of any additional documentation requested by IEDC’s VCI Tax Credit Certification Review Team during the certification process, IEDC shall issue to the applicant:

1). If the application is approved, an Indiana Venture Capital Investment Tax Credit Qualified Business Certification; or,

2). If the application is denied, an IEDC VCI Tax Credit Qualified Business Certification Denial.

Qualified Investment Capital Certification

The term “qualified investment capital” means debt or equity capital that is provided to a qualified Indiana business before December 31, 2008.

Taxpayers that propose to make a qualified investment into a Qualified Indiana Business must submit an application along with the taxpayer’s investment plan to IEDC prior to the investment in order to receive a certification of the investment.

Both the Qualified Indiana Business Application and the Qualified Capital Investment Application are available at http://www.in.gov/icpr/webfile/formsdiv/2681.htm, and from the IEDC office.  Completed applications must be submitted to IEDC at:

Indiana Economic Development Corporation
Development Finance Office - VCI Tax Credit Program
One North Capital, Suite 700
Indianapolis, Indiana 46204

Calculation of Credits

The maximum amount of tax credits available to investors in a qualified Indiana business equals the lesser of:

• The total amount of qualified investment capital provided to the qualified Indiana business in the calendar year, multiplied by twenty percent (20%); or
• Five hundred thousand dollars ($500,000)

If the amount of the credit determined under section 10 of this chapter for a taxpayer in a taxable year exceeds the taxpayer's state tax liability for that taxable year, the taxpayer may carry the excess credit over for a period not to exceed the taxpayer's following five (5) taxable years. The amount of the credit carryover from a taxable year shall be reduced to the extent that the carryover is used by the taxpayer to obtain a credit under this chapter for any subsequent taxable year. A taxpayer is not entitled to a carry-back or a refund of any unused credit amount.