Illinois enacted changes to the angel investment credit program. Taxpayers who qualify for the credit can apply it against Illinois:
- corporate income tax liability; and
- personal income tax liability.
- clarify eligibility limitations; and
- extend the credit reservation period for investments in certain businesses.
Taxpayers eligible to claim the credit include:
- limited liability companies (LLCs); and
Effective beginning January 1, 2019, it does not include:
- taxpayers who own 51% or more of the new business; or
- members related to a taxpayer who own 50% or more of the new business.
The constructive stock ownership rules under IRC Sec. 1536(e) apply, except Illinois sets a 20% ownership threshold, instead of a 5% threshold.
The same limit on control exists under the current credit program. But, it does not refer to control over the new business that receives the investment.
Illinois caps total credits each year at $10 million. It awards the credits on a quarterly basis. It also reserves $500,00 from the annual cap for:
- businesses owned by minorities, women, and disabled individuals; and
- businesses located in counties with a population of 250,000 or less.
Illinois extends the reservation period from 2 to 3 calendar quarters beginning January 1, 2019. Unused credits from the reservation period get added to total credits available for the next quarter.
P.A. 100-686 (H.B. 5214), Laws 2018, effective as noted