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PAG LIN 1 1 Section 1. NEW SECTION. 15E.175 DEFINITIONS. 1 2 As used in this section and sections 15E.176 and 15E.177: 1 3 1. "Iowa business" means a business or industry, 1 4 incorporated or unincorporated, which meets all the following 1 5 criteria: 1 6 a. Has or will have, within thirty days after a loan or 1 7 investment is made by a qualified venture capital company, at 1 8 least fifty percent of its employees or assets located in 1 9 Iowa. 1 10 b. Needs financial assistance in order to commence or 1 11 expand such business or industry which provides or intends to 1 12 provide goods or services. 1 13 2. "Qualified venture capital company" means a 1 14 corporation, limited liability company, or a general or 1 15 limited partnership with its principal place of business 1 16 located within this state, which meets all of the following 1 17 requirements: 1 18 a. Has an initial capitalization of not less than twenty 1 19 million dollars. 1 20 b. Is organized by the Iowa business investment 1 21 corporation, organized under division XV of this chapter, to 1 22 directly or indirectly through its subsidiaries or affiliates 1 23 invest in debt and equity securities of Iowa businesses and 1 24 provide financial assistance for housing initiatives in rural 1 25 areas or in cities having a demonstrated need for affordable 1 26 housing. 1 27 c. Maintains a small business investment company that is 1 28 incorporated in Iowa and maintains its principal place of 1 29 business in this state the purpose of which includes 1 30 increasing the availability of funds for investment in and 1 31 loans to Iowa businesses or housing initiatives. 1 32 d. Will provide or arrange for managerial and other 1 33 advice, assistance, and support for Iowa businesses and 1 34 housing initiatives. 1 35 3. "Taxpayer" means an entity subject to tax under chapter 2 1 422, division III, chapter 422, division V, or chapter 432. 2 2 4. "Tax year" means for entities subject to the state 2 3 corporate income tax or the state franchise tax under chapter 2 4 422, division III or V, respectively, the tax year as defined 2 5 for those divisions or means for insurance companies subject 2 6 to the gross premiums tax under chapter 432, the calendar year 2 7 for which the premiums are taxed. 2 8 Sec. 2. NEW SECTION. 15E.176 TAX CREDITS. 2 9 1. For tax years beginning on or after January 1, 1995, 2 10 there is allowed a credit against that tax imposed under the 2 11 corporate income tax in chapter 422, division III, the 2 12 franchise tax in chapter 422, division V, or the gross 2 13 premiums tax in chapter 432, for investments made by the 2 14 taxpayer in a qualified venture capital company whose purpose 2 15 includes establishing or expanding Iowa business and 2 16 affordable housing within the state. 2 17 2. The amount of credit allowed under subsection 1, 2 18 subject to subsection 4, is computed as follows: 2 19 a. The amount of the qualified venture capital company's 2 20 investment in Iowa companies is divided by the amount of new 2 21 cash invested in the qualified venture capital company. 2 22 b. The resulting percentage, which shall not exceed one 2 23 hundred percent, is multiplied by the amount of the taxpayer's 2 24 investment in the qualified venture capital company. 2 25 c. The amount of the credit is equal to ten percent of the 2 26 product determined in paragraph "b". 2 27 d. The qualified venture capital company shall compute as 2 28 of the end of the taxpayer's tax year the amounts under 2 29 paragraph "c" for each tax year the taxpayer is entitled to 2 30 the credit. 2 31 3. The taxpayer is allowed the credit as computed each 2 32 year in subsection 2 for up to ten consecutive years beginning 2 33 with the first year for which the credit is taken. 2 34 If the amount of the credit exceeds the taxpayer's tax 2 35 liability for the tax year, the excess may be credited to the 3 1 tax liability for the following five tax years or until 3 2 depleted, whichever is the earlier, and is in addition to any 3 3 other credit allowed under this section. 3 4 4. Notwithstanding the amount of credit computed in 3 5 subsection 2, the total amount of credits for all taxpayers 3 6 that shall be allowed under subsection 1 for any fiscal year 3 7 of the qualified venture capital company shall not exceed two 3 8 million five hundred thousand dollars and for all fiscal years 3 9 of the qualified venture capital company shall not exceed 3 10 twenty-five million dollars. In determining if the credit 3 11 allowed has exceeded the fiscal year limit, credits carried 3 12 over from a previous tax year are not counted. 3 13 5. The credit provided for in subsection 2, to the extent 3 14 not previously utilized, shall be freely transferable to and 3 15 by subsequent transferees for a period of ten years from the 3 16 date the credit is first available to the taxpayer. 3 17 Sec. 3. NEW SECTION. 15E.177 COORDINATION OF RESOURCES. 3 18 If a qualified venture capital company is organized by the 3 19 Iowa business investment corporation on or before December 31, 3 20 1996, within ninety days following its organization, the 3 21 qualified venture capital company shall develop and submit a 3 22 written proposal to the shareholders of each business 3 23 development finance corporation organized pursuant to division 3 24 XIII of this chapter, calling for the investment of all the 3 25 assets of each business development finance corporation in 3 26 securities of the qualified venture capital company. A notice 3 27 of a special meeting of the shareholders of the business 3 28 development finance corporation and the written proposal made 3 29 to the business development finance corporation by the 3 30 qualified venture capital company shall be delivered to the 3 31 shareholders of each business development finance corporation 3 32 entitled to vote at the special shareholders meeting not less 3 33 than ten nor more than sixty days before the meeting date 3 34 given by the qualified venture capital company. Action on the 3 35 written proposal by the board of directors of the business 4 1 development finance corporation or any other person shall not 4 2 be required to call the special meeting or authorize voting on 4 3 the written proposal by the shareholders of the business 4 4 development finance corporation. If at the special meeting of 4 5 shareholders of the business development finance corporation 4 6 or any recesses thereof, a majority of the shareholders 4 7 present or represented at the special meeting approve the 4 8 investment proposed by the qualified venture capital company, 4 9 the business development finance corporation shall immediately 4 10 make such an investment of all of its assets. The investment 4 11 by a business development finance corporation of all of its 4 12 assets in the qualified venture capital corporation shall not 4 13 be considered a sale of assets other than in the usual and 4 14 regular course of business and division XIII of the Iowa 4 15 business development finance Act shall not apply to the 4 16 transaction. 4 17 Sec. 4. Section 422.33, Code 1995, is amended by adding 4 18 the following new subsection: 4 19 NEW SUBSECTION. 9. There is allowed as a credit against 4 20 the tax determined in subsection 1 for a tax year an amount 4 21 equal to the qualified venture capital credit as provided in 4 22 section 15E.176. Notwithstanding any other provision, the 4 23 credit allowed for in this subsection shall be applied prior 4 24 to all other credits allowed the taxpayer. The taxpayer shall 4 25 not receive for the same investment a credit under subsection 4 26 8 and this subsection. 4 27 Sec. 5. Section 422.60, Code 1995, is amended by adding 4 28 the following new subsection: 4 29 NEW SUBSECTION. 4. There is allowed as a credit against 4 30 the tax determined in this division for a tax year an amount 4 31 equal to the qualified venture capital credit as provided in 4 32 section 15E.176. Notwithstanding any other provision, the 4 33 credit allowed for in this subsection shall be applied prior 4 34 to all other credits allowed the taxpayer. The allocation of 4 35 revenues to a city or county under section 422.65 shall be 5 1 determined as if the credit under this subsection had not been 5 2 taken. 5 3 Sec. 6. Section 432.1, Code 1995, is amended by adding the 5 4 following new subsection: 5 5 NEW SUBSECTION. 5. There is allowed as a credit against 5 6 the tax determined in subsection 1 or 2 for a tax year an 5 7 amount equal to the qualified venture capital credit as 5 8 provided in section 15E.176. Notwithstanding any other 5 9 provision, the credit allowed for in this subsection shall be 5 10 applied prior to all other credits allowed the taxpayer. 5 11 Sec. 7. 1992 Iowa Acts, chapter 1244, section 1, 5 12 subsection 2, paragraph e, unnumbered paragraph 1, as amended 5 13 by 1993 Iowa Acts, chapter 180, section 46, as amended by 1994 5 14 Iowa Acts, chapter 1201, section 29, is amended to read as 5 15 follows: 5 16 For transfer to the treasurer of state for the purpose of 5 17 facilitating the organization and private capitalization of 5 18 the small business investment company or other entity under 5 19 sections 15E.169 through 15E.171. If the small business 5 20 investment company or another entity for which the funds are 5 21 to be used is not organizedwithin thirty-six months of the5 22effective date of this Act, unused funds shall revert to the 5 23 general fund of the state, however, if such an entity is 5 24 organized, the unused funds shall be transferred irrevocably 5 25 to the qualified venture capital company or other entity for 5 26 which the funds are to be used: 5 27 .................................................. $ 200,000 5 28 Sec. 8. This Act applies retroactively to January 1, 1995, 5 29 for tax years of entities subject to the state corporate 5 30 income tax or franchise tax which begin on or after that date. 5 31 This Act applies retroactively to January 1, 1995, for 5 32 calendar years beginning on or after that date for entities 5 33 subject to the gross premiums tax under chapter 432. 5 34 EXPLANATION 5 35 This bill allows a corporation, financial institution, or 6 1 insurance company to take a corporate, franchise, or insurance 6 2 premiums tax credit for its investment in a qualified venture 6 3 capital company. The qualified venture capital company is an 6 4 entity formed by the existing Iowa business investment 6 5 corporation with an initial capitalization of at least $20 6 6 million. The purpose of the qualified venture capital company 6 7 is to invest primarily in debt and equity securities of Iowa 6 8 businesses and housing initiatives. The total amount of the 6 9 tax credit for all taxpayers is computed each year based on 6 10 the total amount invested in Iowa businesses by the qualified 6 11 venture capital company as of the end of its fiscal year. The 6 12 amount of the annual tax credit for a single taxpayer is equal 6 13 to up to 10 percent of the taxpayer's investment in the 6 14 qualified venture capital company multiplied by the percentage 6 15 the investments in Iowa businesses represent of the total new 6 16 cash invested in the qualified venture capital company. The 6 17 tax credit is allowed for 10 consecutive years following the 6 18 first year the tax credit is taken by the taxpayer. The bill 6 19 limits to $2.5 million the total amount of tax credits that 6 20 can be taken by all taxpayers in any fiscal year of the 6 21 qualified venture capital company. The bill also limits to 6 22 $25 million the total amount of tax credits that can be taken 6 23 by all taxpayers in all fiscal years of the qualified venture 6 24 capital company. The bill applies retroactively to tax years 6 25 beginning on or after January 1, 1995. 6 26 LSB 1623XS 76 6 27 mk/jj/8
Text: SF00110 Text: SF00112 Text: SF00100 - SF00199 Text: SF Index Bills and Amendments: General Index Bill History: General Index
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