Angel Investor Tax Credit
INCOME TAXPAYER-Effective for all taxable years beginning after Dec. 31, 2004 and prior to Jan. 1, 2017.
A Kansas business must make application with the Kansas Department of Commerce and receive approval from Commerce prior to the date on which any cash investment is made.
Kansas Department of Commerce
1000 SW Jackson, Suite 100
Topeka, KS 66612
The credit is 50 percent of the investors’ cash investment in the qualified securities of a qualified Kansas business.
Limitation of Credit
If the amount of credit exceeds the investor’s tax liability in any one taxable year, the remaining portion of the credit may be carried forward until the total amount of the credit is used.
The Kansas Department of Revenue will not allow tax credits of more than $50,000 for a single Kansas business or a total of $250,000 of tax credits for a single year per investor who is a natural person or owner of a permitted entity investor.
No angel investor tax credits shall be allowed for any cash investments in qualified securities for any year after the year 2016.
The cumulative aggregate amount of angel investor tax credits allowed shall not exceed $4 million during tax year 2007 and $6 million for tax year 2008, 2009, 2010, 2012 and each year thereafter. For tax year 2011 the tax credits allowed shall not exceed $5 million.
No investor shall claim an angel investor tax credit for cash investments in Kansas Venture Capital, Inc. No Kansas venture capital company shall qualify for the tax credit for an investment in a fund created by articles 81, 82, 83 or 84 of chapter 74 of the Kansas Statutes Annotated.
Transfer of Credit
Any investor who has not owed any Kansas income tax under the provisions of article 32, chapter 79 of the Kansas Statutes Annotated for the immediate past three taxable years, who does not reasonably believe that it will owe any such tax for the current taxable year and who makes a cash investment in a qualified security of a qualified Kansas business shall be deemed to acquire an interest in the nature of a transferable credit limited to an amount equal to 50 percent of this cash investment. This interest may be transferred to any natural person of net worth as defined in 17 CFR 230.501 (a) as in effect on the effective date of this act whether or not such person is then an investor and be claimed by the transferee as a credit against the transferee's Kansas income tax liability in the year the cash investment was made by the original investor. Only the full credit for any one investment may be transferred and this interest may only be transferred one time.
Procedures to Claim the Credit
You may download Schedule K-30 to claim the angel investor tax credit. This schedule must be completed and submitted with the income tax return. You may also call the Department of Revenue voice mail system at 785-296-4937 to request Schedule K-30. You will be asked to give your name, address, phone number and form(s) you desire. Please allow two weeks for delivery of your forms.
INVESTOR OR ANGEL INVESTOR
An accredited investor who is a natural person or an owner of a permitted entity investor who is an investor of high net worth, as defined in 17 C.F.R. 230.501(a) as in effect on the effective date of this act, who seeks high returns through private investments in start-up companies and may seek active involvement in business, such as consulting and mentoring the entrepreneur. For the purposes of this act, a person who serves as an executive, officer, employee, vendor or independent contractor of the business in which an otherwise qualified cash investment is made is not an angel investor and such person shall not qualify for the issuance of tax credits for such investment.
Money or money equivalent is consideration of qualified securities.
A cash investment through any one or more forms of financial assistance as provided that have been approved in form and substance by KTEC. Such forms of financial assistance are: (1) any form of equity, such as: (A) a general or limited, partnership interest; (B) common stock; (C) preferred stock, with or without voting rights, without regard to seniority position, and whether or not convertible into common stock; or (D) any form of subordinate or convertible debt, or both, with warrants or other means of equity conversion attached; or (2) a debt instrument, such as a note or debenture that is secured or unsecured, subordinated to the general creditors of the debtor and requires no payments of principal, other than principal payments required to be made out of any future profits of the debtor, for at least a seven-year period after commencement of such debt instrument’s term.
Qualified Kansas Business
The Kansas businesses that are approved and certified as qualified Kansas businesses as provided in K.S.A. 2004 Supp. 74-8134, and amendments thereto.
Any business owned by an individual, any partnership, association or corporation domiciled in Kansas, or any corporation, even if a wholly owned subsidiary of a foreign corporation, that does business primarily in Kansas or does substantially all of such businesses’ production in Kansas.
Any natural person who is, directly or indirectly, a partner, stock holder, or member in a permitted entity investor.
PERMITTED ENTITY INVESTOR
(A) Any general partnership, limited partnership, corporation, that has in effect a valid election to be taxed as an S corporation under the United States internal revenue code, or a limited liability company that has elected to be taxed as a partnership under the United States internal revenue code and (B) that was established and is operated for the sole purpose of making investments in other entities.