08 LC 38
0573
House
Bill 1196
By:
Representatives Stephens of the
164th,
Keen of the
179th,
Burkhalter of the
50th,
and Mills of the
25th
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia
Annotated, relating to the imposition, rate, and computation of income tax, so
as to provide for certain tax credits; to amend Chapter 10 of Title 10 of the
Official Code of Georgia Annotated, relating to the Seed-Capital Fund, so as to
provide that funds invested by the state from the Seed-Capital Fund, with
certain restrictions, may include funds from sources other than the investment
entity; to provide for related matters; to provide an effective date; to repeal
conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Article
2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating
to the imposition, rate, and computation of income tax, is amended by adding two
new Code sections to read as follows:
"48-7-40.27.
(a)
As used in this Code section, the term:
(1)
'Credit' means a state income tax credit against the tax imposed pursuant to
this article in an amount equal to 25 percent of the taxpayer´s qualified
investment.
(2)
'Qualified investment' means a cash investment in the research
fund.
(3)
'Research fund' means a fund that is an investment entity pursuant to paragraph
(7) of Code Section 10-10-1, the purpose of which is to provide early-stage
financing for businesses formed as a result of the intellectual property
resulting from the research conducted in the research universities in this
state.
(b)
A taxpayer shall be entitled to a credit for any qualified investment he or she
has made, subject to the conditions and limitations set forth in this Code
section. Notwithstanding paragraph (3) of subsection (c) of this Code section,
once the research fund reaches $30 million in total private qualified
investments, investors shall no longer be eligible for a credit pursuant to this
subsection.
(c)
The credit provided in subsection (b) of this Code section shall be subject to
the following conditions and limitations:
(1)
In no event shall the credit for a taxable year exceed the taxpayer´s
income tax liability. Any unused portion of the credit shall be permitted to be
carried forward and applied to the taxpayer´s tax liability for the
subsequent ten years;
(2)
The utilization of the credit shall have no effect on the taxpayer´s basis
in its investment;
(3)
In any calendar year that the amount of credits exceeds the maximum aggregate
limit set in subsection (b) of this Code section, tax credits for that calendar
year shall be allocated on a pro rata basis among the taxpayers who made
qualified investments during that calendar year. The department shall be
required to make the allocation of credits by the later of March 31 of the
following year or within 30 days of receipt of the research fund´s report,
required by subsection (e) of this Code section, listing the investments made
during the allocation year. Credits earned prior to the allocation year shall
not be affected by the allocation;
(4)
If the taxpayer is a Georgia Subchapter 'S' corporation, a partnership, or a
limited liability company taxed as a partnership, the credit shall be claimed by
the respective shareholders, partners, or members of such entities in the same
manner as they would account for their proportionate shares of income or loss
from such entities. For the purposes of this Code section, such shareholders,
partners, or members shall be considered to have made the qualified investments
attributable to their interest in such entities; and
(5)
No taxpayer shall be eligible to claim the credit provided in subsection (b) of
this Code section for a cash investment if they claim the tax credit provided in
Code Section 48-7-40.28 for such cash investment.
(d)
The research fund shall notify taxpayers when the total amount of qualified
investments reaches the limitations specified in subsection (b) of this Code
section. Available tax credits shall be allocated to taxpayers with respect to
their qualified investments on a pro rata basis in the calendar year in which
the maximum aggregate limit of tax credits is exceeded.
(e)
The research fund shall provide the department, at a minimum, a report that
includes the taxpayer´s name, the last four digits of the taxpayer´s
social security number or their employment identification number, and the amount
of the taxpayer´s cash investment. The research fund shall file this
report with the department no later than January 31 of the year following the
end of the reporting year.
(f)
If the research fund liquidates prior to the investment of all cash collected
from taxpayers, the credit claimed pursuant to this Code section shall be
recaptured. Such recapture shall be equal to the amount of tax credit
attributable to the cash investment returned to the taxpayer by the research
fund. The recapture amount shall be treated as taxes payable to the state for
the taxable year in which such return of the investment occurs.
(g)
The commissioner may require such reports, promulgate such regulations, and
gather such relevant data deemed necessary and advisable for the implementation
of this Code section.
48-7-40.28.
(a)
As used in this Code section, the term:
(1)
'Credit' means a state income tax credit against the tax imposed pursuant to
this article in an amount equal to 10 percent of the taxpayer´s qualified
investment.
(2)
'Qualified investment' means a cash investment in a business entity in which the
research fund has invested.
(3)
'Research fund' means a fund that is an investment entity pursuant to paragraph
(7) of Code Section 10-10-1, the purpose of which is to provide early-stage
financing for businesses formed as a result of the intellectual property
resulting from the research conducted in the research universities in this
state.
(b)
A taxpayer shall be entitled to a credit for any qualified investment he or she
has made, subject to the conditions and limitations set forth in this Code
section. Notwithstanding paragraph (3) of subsection (c) of this Code section,
once the research fund reaches $75 million in total private qualified
investments, investors shall no longer be eligible for a credit pursuant to this
subsection.
(c)
The credit provided in subsection (b) of this Code section shall be subject to
the following conditions and limitations:
(1)
In no event shall the credit for a taxable year exceed the taxpayer´s
income tax liability. Any unused portion of the credit shall be permitted to be
carried forward and applied to the taxpayer´s tax liability for the
subsequent ten years;
(2)
The utilization of the credit shall have no effect on the taxpayer´s basis
in its investment;
(3)
In any calendar year that the amount of credits exceeds the maximum aggregate
limit set in subsection (b) of this Code section, tax credits for that calendar
year shall be allocated on a pro rata basis among the taxpayers who made
qualified investments during that calendar year. The department shall be
required to make the allocation of credits by the later of March 31 of the
following year or within 30 days of receipt of the research fund´s report,
required by subsection (e) of this Code section, listing the investments made
during the allocation year. Credits earned prior to the allocation year shall
not be affected by the allocation;
(4)
If the taxpayer is a Georgia Subchapter 'S' corporation, a partnership, or a
limited liability company taxed as a partnership, the credit shall be claimed by
the respective shareholders, partners, or members of such entities in the same
manner as they would account for their proportionate shares of income or loss
from such entities. For the purposes of this Code section, such shareholders,
partners, or members shall be considered to have made the qualified investments
attributable to their interest in such entities;
(5)
A taxpayer shall not claim the credit provided in subsection (b) of this Code
section for a cash investment into the research fund; and
(6)
If the research fund is liquidated, taxpayers shall no longer be eligible for a
credit.
(d)
The research fund shall notify taxpayers when the total amount of qualified
investments reaches the limitations specified in subsection (b) of this Code
section. Available tax credits shall be allocated to taxpayers with respect to
their qualified investments on a pro rata basis in the calendar year in which
the maximum aggregate limit of tax credits is exceeded.
(e)
The research fund shall provide the department, at a minimum, a report that
includes the taxpayer´s name, the last four digits of the taxpayer´s
social security number or their employment identification number, and the amount
of the taxpayer´s cash investment. The research fund shall file this
report with the department no later than January 31 of the year following the
end of the reporting year.
(f)
The commissioner may require such reports, promulgate such regulations, and
gather such relevant data deemed necessary and advisable for the implementation
of this Code section."
SECTION
2.
Chapter
10 of Title 10 of the Official Code of Georgia Annotated, relating to the
Seed-Capital Fund, is amended by revising paragraph (1) of subsection (b) of
Code Section 10-10-4, relating to investing of funds with investment entities,
as follows:
"(1)
Either:
(A)
At least $3.00 of equity contributions has been committed in writing to the
investment entity by persons other than the state for every $1.00 of equity
contributions committed by the state from the fund or from an investment entity
as
to which the state is the sole limited
liability owner
to the
investment entity
of;
or
(B)
At least $1.00 of equity contributions has been committed in writing to the
investment entity by persons other than the state for every $1.00 of equity
contributions committed by the state from the fund or from an investment entity
as
to which the state is the sole limited
liability owner
to an
investment entity
of;
provided, however, that no investment is to be made from such investment entity
in qualified securities
without an
equal or greater investment in the same enterprise from sources other than the
investment entity, such that
unless,
in total, at least $3.00 of investment from sources other than the state,
including
which may
include funds from sources other than the investment entity
and funds invested by the investment
entity in the enterprise that are other than from equity contributions made by
the state from the fund or from an investment entity
as
to which the state is the sole limited
liability owner
of,
has been committed to such enterprise for every $1.00 of the state´s
portion of the amount invested in the qualified securities of such
enterprise;"
SECTION
3.
This
Act shall become effective upon its approval by the Governor or upon its
becoming law without such approval and shall be applicable to investments made
on or after July 1, 2008.
SECTION
4.
All
laws and parts of laws in conflict with this Act are repealed.