SENATE BILL 150
47th legislature - STATE OF NEW MEXICO - first session, 2005
INTRODUCED BY
H. Diane Snyder
FOR THE REVENUE STABILIZATION AND TAX POLICY COMMITTEE
AN ACT
RELATING TO TAXATION; PROVIDING FOR AN INCOME TAX CREDIT FOR INVESTMENT IN CERTAIN HIGH-TECHNOLOGY, BIOTECHNOLOGY OR MANUFACTURING BUSINESSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. A new section of the Income Tax Act is enacted to read:
"[NEW MATERIAL] ANGEL INVESTMENT CREDIT.--
A. To encourage investment in qualified businesses, any taxpayer who files an individual New Mexico income tax return, who is not a dependent of another taxpayer and who makes a qualified investment may claim a credit in an amount not to exceed fifteen percent of not more than five hundred thousand dollars ($500,000) of the qualified investment. The tax credit shall be known as the "angel investment credit".
B. A taxpayer may claim the angel investment credit for not more than three qualified investments for each taxable year in which the taxpayer makes a qualified investment. The taxpayer may claim the credit no later than one year following the end of the calendar year in which the qualified investment was made provided that a claim for the credit may not be made or allowed with respect to any investment made after December 31, 2009. A claim for the angel investment credit shall not exceed twenty-five thousand dollars ($25,000) for each qualified investment made by the taxpayer.
C. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim one-half of the credit that would have been allowed on a joint return.
D. A taxpayer who otherwise qualifies for and claims the angel investment credit on a qualified investment made by a partnership of which the taxpayer is a member may claim a credit only in proportion to the taxpayer's interest in the partnership. The total credit claimed by all members of the partnership shall not exceed twenty-five thousand dollars ($25,000) for each qualified investment made by the partnership.
E. The angel investment credit may only be deducted from the taxpayer's income tax liability. Any portion of the tax credit provided by this section that remains unused at the end of the taxpayer's taxable year may be carried forward for three consecutive years; provided that the total tax credits claimed under this section shall not exceed twenty-five thousand dollars ($25,000) for each qualified investment made by the taxpayer.
F. As used in this section:
(1) "equity" means common or preferred stock of a corporation, a partnership interest in a limited partnership or a membership interest in a limited liability company, that is not subject to an option for redemption by the issuer within five years from the date of issuance;
(2) "qualified business" means a business that:
(a) engages in high-technology, biotechnology and manufacturing activities in New Mexico;
(b) has gross revenues of not more than five million dollars ($5,000,000) during the previous fiscal year; and
(c) is not primarily engaged in or is not primarily organized as any of the following types of businesses: 1) banks; 2) savings and loan institutions; 3) credit or finance institutions; 4) financial broker or investment firms; 5) businesses organized for the primary purpose of rendering professional services; 6) accounting businesses; 7) government, charitable, religious or trade institutions or organizations; 8) conventional coal, oil, gas and mineral exploration businesses; 9) insurance businesses; 10) real estate design or engineering businesses; 11) construction or construction contracting businesses; 12) consulting or brokering businesses; and 13) residential housing businesses; and
(3) "qualified investment" means a cash investment in a qualified business for equity, but does not include an investment by a taxpayer if the taxpayer, a member of the taxpayer's immediate family or an entity affiliated with the taxpayer receives compensation from the qualified business in exchange for services provided to the qualified business within one year of investment in the qualified business."
Section 2. TEMPORARY PROVISION.--For taxable years 2010 through 2012, a taxpayer may carry forward amounts resulting from angel investment credits claimed and approved for qualified investments made in the calendar year 2007, 2008 or 2009.
Section 3. DELAYED REPEAL.--The provisions of Section 1 of this act are repealed on January 1, 2011.
Section 4. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2005.
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