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Tax News
Proposed Legislation - Credit for Investments in Small Technology Innovation Companies
January 24, 2011
Legislative Actions
Few weeks ago Rep. Rush D. Holt, D-N.J introduced H.R. 133, the Creating Jobs From Innovative Small Businesses Act of 2011.  If this legislation passes, which should not come as a surprise considering Congress's earnest efforts to jumpstart the economy, it would offer an income tax credit of up to $100,000 for investments in small technology innovation companies. The credit will be part of the general business credit and will come as newly enacted Section 45S. The credit will be afforded for qualified equity investments which includes original issue of stock or capital interest in a partnership that is designated by the Secretary as qualified high technology small business. It is not entirely clear what would qualify as such a business, but at a minimum, the legislation provides that the business should have fewer than 500 employees and at least 50% of its expenditures should be for R&D under Section 174.  Presumably, the credit will pass through to partners and the limitations should be applicable at the partner level. If this legislation comes to fruition, venture capital investors should have an additional incentive to put money in tech companies.  The status of the legislation could be tracked here http://www.govtrack.us/congress/bill.xpd?bill=h112-133.
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Tags: Creating Jobs From Innovative Small Businesses Act of 2011