A qualified investor who, prior to January 1, 2018, makes an equity investment in a qualified small business from an advanced industry is allowed an income tax credit that is equal to a percentage of the investment, up to a maximum credit of $50,000. The Colorado office of economic development (office) determines the eligibility for the tax credits and issues nontransferable tax credit certificates that are used to claim the credit. The maximum amount of tax credits allowed for a calendar year is $750,000.
The bill extends the credit by allowing qualified investments made on or after January 1, 2018, but prior to January 1, 2023, to qualify for the tax credit. From 2019 through 2022, the total maximum amount of credits for a calendar year is increased to $1.5 million. Beginning with the 2018 calendar year, if the office authorizes less than this amount in a year, then the remaining, unused credits are added to the next year's total maximum amount. In addition, the definition of 'qualified small business' is expanded to include a company that has annual revenues of less than $5 million or that has been actively operating and generating revenue for less than 5 years. Currently, a business must meet both criteria, in addition to other criteria that will continue to apply.
The advanced industry investment tax credit cash fund, which was started with money transferred from another cash fund and has no current revenue source, is repealed.
In 2022, the office is required to submit to legislative committees a report that includes information about the tax credits issued after January 1, 2018, and the economic benefits from the related qualified investments.
(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)