State of Illinois
2017 and 2018


Introduced , by Rep. Michael J. Madigan


35 ILCS 5/220

    Amends the Illinois Income Tax Act. Makes a technical change in a Section concerning the angel investment credit.

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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
5changing Section 220 as follows:
6    (35 ILCS 5/220)
7    Sec. 220. Angel investment credit.
8    (a) As used in this Section:
9    "Applicant" means a corporation, partnership, limited
10liability company, or a natural person that that makes an
11investment in a qualified new business venture. The term
12"applicant" does not include a corporation, partnership,
13limited liability company, or a natural person who has a direct
14or indirect ownership interest of at least 51% in the profits,
15capital, or value of the investment or a related member.
16    "Claimant" means an applicant certified by the Department
17who files a claim for a credit under this Section.
18    "Department" means the Department of Commerce and Economic
20    "Qualified new business venture" means a business that is
21registered with the Department under this Section.
22    "Related member" means a person that, with respect to the
23investment, is any one of the following:



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1        (1) An individual, if the individual and the members of
2    the individual's family (as defined in Section 318 of the
3    Internal Revenue Code) own directly, indirectly,
4    beneficially, or constructively, in the aggregate, at
5    least 50% of the value of the outstanding profits, capital,
6    stock, or other ownership interest in the applicant.
7        (2) A partnership, estate, or trust and any partner or
8    beneficiary, if the partnership, estate, or trust and its
9    partners or beneficiaries own directly, indirectly,
10    beneficially, or constructively, in the aggregate, at
11    least 50% of the profits, capital, stock, or other
12    ownership interest in the applicant.
13        (3) A corporation, and any party related to the
14    corporation in a manner that would require an attribution
15    of stock from the corporation under the attribution rules
16    of Section 318 of the Internal Revenue Code, if the
17    applicant and any other related member own, in the
18    aggregate, directly, indirectly, beneficially, or
19    constructively, at least 50% of the value of the
20    corporation's outstanding stock.
21        (4) A corporation and any party related to that
22    corporation in a manner that would require an attribution
23    of stock from the corporation to the party or from the
24    party to the corporation under the attribution rules of
25    Section 318 of the Internal Revenue Code, if the
26    corporation and all such related parties own, in the



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1    aggregate, at least 50% of the profits, capital, stock, or
2    other ownership interest in the applicant.
3        (5) A person to or from whom there is attribution of
4    stock ownership in accordance with Section 1563(e) of the
5    Internal Revenue Code, except that for purposes of
6    determining whether a person is a related member under this
7    paragraph, "20%" shall be substituted for "5%" whenever
8    "5%" appears in Section 1563(e) of the Internal Revenue
9    Code.
10    (b) For taxable years beginning after December 31, 2010,
11and ending on or before December 31, 2016, subject to the
12limitations provided in this Section, a claimant may claim, as
13a credit against the tax imposed under subsections (a) and (b)
14of Section 201 of this Act, an amount equal to 25% of the
15claimant's investment made directly in a qualified new business
16venture. In order for an investment in a qualified new business
17venture to be eligible for tax credits, the business must have
18applied for and received certification under subsection (e) for
19the taxable year in which the investment was made prior to the
20date on which the investment was made. The credit under this
21Section may not exceed the taxpayer's Illinois income tax
22liability for the taxable year. If the amount of the credit
23exceeds the tax liability for the year, the excess may be
24carried forward and applied to the tax liability of the 5
25taxable years following the excess credit year. The credit
26shall be applied to the earliest year for which there is a tax



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1liability. If there are credits from more than one tax year
2that are available to offset a liability, the earlier credit
3shall be applied first. In the case of a partnership or
4Subchapter S Corporation, the credit is allowed to the partners
5or shareholders in accordance with the determination of income
6and distributive share of income under Sections 702 and 704 and
7Subchapter S of the Internal Revenue Code.
8    (c) The maximum amount of an applicant's investment that
9may be used as the basis for a credit under this Section is
10$2,000,000 for each investment made directly in a qualified new
11business venture.
12    (d) The Department shall implement a program to certify an
13applicant for an angel investment credit. Upon satisfactory
14review, the Department shall issue a tax credit certificate
15stating the amount of the tax credit to which the applicant is
16entitled. The Department shall annually certify that the
17claimant's investment has been made and remains in the
18qualified new business venture for no less than 3 years.
19    If an investment for which a claimant is allowed a credit
20under subsection (b) is held by the claimant for less than 3
21years, or, if within that period of time the qualified new
22business venture is moved from the State of Illinois, the
23claimant shall pay to the Department of Revenue, in the manner
24prescribed by the Department of Revenue, the amount of the
25credit that the claimant received related to the investment.
26    (e) The Department shall implement a program to register



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1qualified new business ventures for purposes of this Section. A
2business desiring registration shall submit an application to
3the Department in each taxable year for which the business
4desires registration. The Department may register the business
5only if the business satisfies all of the following conditions:
6        (1) it has its headquarters in this State;
7        (2) at least 51% of the employees employed by the
8    business are employed in this State;
9        (3) it has the potential for increasing jobs in this
10    State, increasing capital investment in this State, or
11    both, and either of the following apply:
12            (A) it is principally engaged in innovation in any
13        of the following: manufacturing; biotechnology;
14        nanotechnology; communications; agricultural sciences;
15        clean energy creation or storage technology;
16        processing or assembling products, including medical
17        devices, pharmaceuticals, computer software, computer
18        hardware, semiconductors, other innovative technology
19        products, or other products that are produced using
20        manufacturing methods that are enabled by applying
21        proprietary technology; or providing services that are
22        enabled by applying proprietary technology; or
23            (B) it is undertaking pre-commercialization
24        activity related to proprietary technology that
25        includes conducting research, developing a new product
26        or business process, or developing a service that is



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1        principally reliant on applying proprietary
2        technology;
3        (4) it is not principally engaged in real estate
4    development, insurance, banking, lending, lobbying,
5    political consulting, professional services provided by
6    attorneys, accountants, business consultants, physicians,
7    or health care consultants, wholesale or retail trade,
8    leisure, hospitality, transportation, or construction,
9    except construction of power production plants that derive
10    energy from a renewable energy resource, as defined in
11    Section 1 of the Illinois Power Agency Act;
12        (5) at the time it is first certified:
13            (A) it has fewer than 100 employees;
14            (B) it has been in operation in Illinois for not
15        more than 10 consecutive years prior to the year of
16        certification; and
17            (C) it has received not more than $10,000,000 in
18        aggregate private equity investment in cash;
19        (6) (blank); and
20        (7) it has received not more than $4,000,000 in
21    investments that qualified for tax credits under this
22    Section.
23    (f) The Department, in consultation with the Department of
24Revenue, shall adopt rules to administer this Section. The
25aggregate amount of the tax credits that may be claimed under
26this Section for investments made in qualified new business



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1ventures shall be limited at $10,000,000 per calendar year.
2    (g) A claimant may not sell or otherwise transfer a credit
3awarded under this Section to another person.
4    (h) On or before March 1 of each year, the Department shall
5report to the Governor and to the General Assembly on the tax
6credit certificates awarded under this Section for the prior
7calendar year.
8        (1) This report must include, for each tax credit
9    certificate awarded:
10            (A) the name of the claimant and the amount of
11        credit awarded or allocated to that claimant;
12            (B) the name and address of the qualified new
13        business venture that received the investment giving
14        rise to the credit and the county in which the
15        qualified new business venture is located; and
16            (C) the date of approval by the Department of the
17        applications for the tax credit certificate.
18        (2) The report must also include:
19            (A) the total number of applicants and amount for
20        tax credit certificates awarded under this Section in
21        the prior calendar year;
22            (B) the total number of applications and amount for
23        which tax credit certificates were issued in the prior
24        calendar year; and
25            (C) the total tax credit certificates and amount
26        authorized under this Section for all calendar years.



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1(Source: P.A. 96-939, eff. 1-1-11; 97-507, eff. 8-23-11;
297-1097, eff. 8-24-12.)