2020 Delaware Code
Title 30 - State Taxes
Chapter 20D. Angel Investor Job Creation and Innovation Act [Effective Jan. 1, 2019, Until Jan. 1, 2022] [For Application of This Chapter, See 81 Del. Laws, C. 244, §§? 4, 5]
§ 20D-105 Tax credit allowed [Effective until Jan. 1, 2022] [For application of this section, see 81 Del. Laws, c. 244, §§ 4, 5].
(a) A qualified investor or qualified fund is eligible for a tax credit equal to 25% of the qualified investment in a qualified small business.
(1) The qualified investor or qualified fund must maintain its investment in the qualified small business for 180 days before claiming the tax credit.
(2) Notwithstanding the foregoing, if the qualified investor or qualified fund fails to maintain its investment in the qualified small business for at least 3 years, consisting of the calendar year in which the investment was made and the 2 following calendar years, the qualified investor or qualified fund must repay the tax credit previously claimed as provided in § 20D-108 of this title. The 3-year holding period does not apply if any of the following apply:
a. The qualified small business becomes worthless or liquidates and dissolves after the investment has been held for 180 days, but before the end of the 3-year period.
b. 80% or more of the assets owned or the equity issued by the qualified small business is sold to an unrelated third party before the end of the 3-year period.
c. The qualified small business's common stock begins trading on a public exchange before the end of the 3-year period.
d. The qualified investor dies before the end of the 3-year period.
(b) Investments made by a pass-through entity qualify for a tax credit only if the entity is a qualified fund.
(c) (1) The Director may not approve tax credits that exceed the following total maximum amounts for any calendar year for an individual:
a. $250,000 for spouses electing to file a joint return under § 1162 of this title.
b. $125,000 for individuals filing a return utilizing any other filing status.
(2) The total maximum amount in tax credits allowed under paragraph (c)(1) of this section applies to a qualified investor's cumulative qualified investments as an individual qualified investor and as an investor in a qualified fund.
(d) The Director may not approve more than $5,000,000 in tax credits for each calendar year beginning after December 31, 2018, and before January 1, 2024. The Director may not approve more than a total of $500,000 in credits for qualified investments in any 1 qualified small business.
(e) The Director may not approve a tax credit to a qualified investor either as an individual qualified investor or as an investor in a qualified fund if, at the time the investment is proposed, the investor meets any of the following:
(1) Is an officer or principal of the qualified small business.
(2) Either individually or in combination with 1 or more members of the investor's family, owns, controls, or holds the power to vote 20% or more of the outstanding securities of the qualified small business.
a. A member of the family of an individual disqualified by paragraph (e)(2) of this section is not eligible for a tax credit under this chapter.
b. For a married couple filing a joint return, the limitations in paragraph (e)(2) of this section apply collectively to the investor and spouse.
c. For purposes of determining the ownership interest of an investor under paragraph (e)(2) of this section, the rules under § 267(c) and (e) of the Internal Revenue Code (26 U.S.C. § 267(c) and (e)) apply.
(f) The application for tax credits to be approved for calendar year 2019 must be made available on the Division's web site by January 1, 2019, and the Division must begin accepting applications by January 1, 2019. The application for tax credits to be approved for subsequent years must be made available on the Division's web site by November 1 of the preceding calendar year.
(g) Qualified investors and qualified funds must apply to the Director for tax credits under this section.
(1) The Director must allocate tax credits to qualified investors or qualified funds in the order that the tax credit applications are filed with the Division.
(2) The Director must approve or reject tax credit applications within 15 days of receiving the application.
(3) The investment specified in the application must be made within 60 days of the approval of the tax credit.
a. If the investment is not made within 60 days, the tax credit approval is revoked and the tax credit is available for allocation to another qualified investor or qualified fund.
b. A qualified investor or qualified fund that fails to invest as specified in the application within 60 days of approval of the tax credits must notify the Director of the failure to invest within 5 business days of the expiration of the 60-day investment period.
c. The investment specified in the application must be made in the same calendar year in which the tax credit certification is received, regardless of whether the 60-day investment period continues into a subsequent calendar year.
(h) The Division must treat tax credit applications filed on the same day as having been filed contemporaneously.
(1) If 2 or more qualified investors or qualified funds file tax credit applications on the same day, and the aggregate amount of the tax credit applications exceeds the aggregate limit of tax credits authorized under this chapter or the lesser amount of credits that remain unallocated on that day, then the credits must be allocated among the qualified investors or qualified funds who filed on that day on a pro rata basis with respect to the amounts claimed.
(2) The pro rata allocation for any 1 qualified investor or qualified fund is the product obtained by multiplying a fraction, the numerator of which is the amount of the tax credit applications filed on behalf of such qualified investor or qualified fund and the denominator of which is the total of all tax credit applications filed on behalf of all applicants on that day, by the amount of credits that remain unallocated on that day for the calendar year.
(i) (1) A qualified investor or qualified fund, or a qualified small business acting on their behalf, must notify the Director when an investment for which tax credits were approved has been made, and the calendar year in which the investment was made.
(2) A qualified fund must also provide the Director with a statement indicating the amount invested by each investor in the qualified fund based on each investor's share of the assets of the qualified fund at the time of the qualified investment.
