97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB5805

 

Introduced 2/16/2012, by Rep. Dwight Kay

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/223 new

    Amends the Illinois Income Tax Act. Provides that a taxpayer shall be allowed an income tax credit equal to 50% of the taxpayer's qualified investments in a qualified business during the taxable year. Defines "qualified investments" and "qualified business". Provides that any credit not usable for the taxable year may be carried over for the next 15 succeeding taxable years. Provides that the amount of tax credit available for a calendar year shall be $5,000,000.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB5805LRB097 19447 HLH 64700 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by adding
5Section 223 as follows:
 
6    (35 ILCS 5/223 new)
7    Sec. 223. Qualified equity and subordinated debt
8investments tax credit.
9    (a) As used in this Section:
10    "Commercialization investment" means a qualified
11investment in a qualified business that was created to
12commercialize research developed at or in partnership with an
13institution of higher education.
14    "Equity" means common stock or preferred stock, regardless
15of class or series, of a corporation; a partnership interest in
16a limited partnership; or a membership interest in a limited
17liability company, which is not required or subject to an
18option on the part of the taxpayer to be redeemed by the issuer
19within 3 years from the date of issuance.
20    "Qualified business" means a business which (i) has annual
21gross revenues of no more than $3,000,000 in its most recent
22fiscal year, (ii) has its principal office or facility in the
23State of Illinois, (iii) is engaged in business primarily in or

 

 

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1does substantially all of its production in the State of
2Illinois, (iv) has not obtained during its existence more than
3$3,000,000 in aggregate gross cash proceeds from the issuance
4of its equity or debt investments (not including commercial
5loans from chartered banking or savings and loan institutions),
6and (v) is primarily engaged, or is primarily organized to
7engage, in the fields of advanced computing, advanced
8materials, advanced manufacturing, agricultural technologies,
9biotechnology, electronic device technology, energy,
10environmental technology, information technology, medical
11device technology, nanotechnology, or any similar
12technology-related field.
13    "Qualified investment" means a cash investment in a
14qualified business in the form of equity or subordinated debt;
15however, an investment shall not be qualified if the taxpayer
16who holds the investment, or any of the taxpayer's family
17members, or any entity affiliated with the taxpayer, receives
18or has received compensation from the qualified business in
19exchange for services provided to the business as an employee,
20officer, director, manager, independent contractor or
21otherwise in connection with or within one year before or after
22the date of the investment. For the purposes of this Section,
23reimbursement of reasonable expenses incurred shall not be
24deemed to be compensation.
25    "Subordinated debt" means indebtedness of a corporation,
26general or limited partnership, or limited liability company

 

 

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1that (i) by its terms required no repayment of principal for
2the first 3 years after issuance; (ii) is not guaranteed by any
3other person or secured by any assets of the issuer or any
4other person; and (iii) is subordinated to all indebtedness and
5obligations of the issuer to national or State-chartered
6banking or savings and loan institutions.
7    (b) For taxable years beginning on or after January 1,
82012, a taxpayer shall be allowed an income tax credit equal to
950% of the taxpayer's qualified investments during the taxable
10year. No credit shall be allowed to any taxpayer that has
11committed capital under management in excess of $10,000,000 and
12engages in the business of making debt or equity investments in
13private businesses, or to any taxpayer that is allocated a
14credit as a partner, shareholder, member, or owner of an entity
15that engages in such business.
16    (c) The amount of any credit attributable to a qualified
17investment by a partnership, electing small business
18corporation (S corporation), or limited liability company
19shall be allocated to the individual partners, shareholders, or
20members, as the case may be, as they may determine.
21    (d) The aggregate amount of the credit for each taxpayer
22shall not exceed the lesser of (i) the tax imposed for the
23taxable year or (ii) $50,000. Any credit not usable for the
24taxable year in which the credit was allowed may be, to the
25extent usable, carried over for the next 15 succeeding taxable
26years or until the total amount of the tax credit has been

 

 

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1taken, whichever occurs first.
2    (e) The amount of tax credits available under this Section
3for a calendar year shall be $5,000,000. Of the amount of
4available credits, one-half of the amount shall be allocated
5exclusively for credits for commercialization investments.
6That allocation of tax credits shall constitute the minimum
7amount of tax credits to be allocated for commercialization
8investments. However, if the amount of tax credits requested
9for commercialization investments is less than one-half of the
10total amount of credits available under this Section, the
11balance of the credits shall be allocated for qualified
12investments in any qualified business under this Section.
13    (f) The Department of Revenue shall promulgate rules in
14accordance with the Illinois Administrative Procedure Act to
15implement this Section.