Updates To The Indiana Enterprise Capital Funding Tax Credit score Program – Company and Firm Legislation

Efficient Jan. 1, 2022, the Indiana State legislature up to date
the favored Enterprise Capital Funding Tax Credit score program (Indiana
VCI Program) to (1) develop the Indiana VCI Program to Indiana
funding funds; (2) enhance the quantity of tax credit typically
out there underneath the Indiana VCI Program; and (3) grant buyers a
higher quantity of tax credit in reference to investments in
girls and minority-owned enterprise enterprises (W/MBEs).

The Indiana VCI Program supplies a nonrefundable tax credit score to
buyers making sure investments in Indiana companies. The
Indiana VCI Program is designed to incentivize funding in
fast-growing Indiana corporations. To reap the benefits of the Indiana
VCI Program, an investor should make a qualifying funding in a
certified Indiana enterprise or funding fund.

Usually, to reap the benefits of the Indiana VCI Program:

1. The enterprise or funding fund should first be licensed as a
   Certified Indiana Enterprise or Certified Indiana Funding Fund by
   the Indiana Financial Growth Company (IEDC).




2. The investor should submit a Certified Capital Funding
   Utility to the IEDC earlier than making its funding.




3. After the Certified Capital Funding Utility is authorized
   by the IEDC, the investor should spend money on the enterprise or funding
   fund and submit the required documentation of the funding to the
   IEDC.




4. The IEDC will then challenge the investor a Certification Letter.
   This Certification Letter should be submitted with the investor’s
   Indiana state tax return to assert the tax credit score.

The quantity of the tax credit score out there to an investor underneath the
Indiana VCI Program in every calendar 12 months is:

• Investments in a Certified Indiana Enterprise: 25% of the
  funding quantity (e.g., $25,000 tax credit score out there for a
  $100,000 whole funding), as much as a complete lifetime tax credit score
  quantity of $1,000,000.




• Investments in a Certified W/MBE: 30% of the funding quantity
  (e.g., $30,000 tax credit score out there for a $100,000 whole
  funding), as much as a complete lifetime tax credit score quantity of
  $1,500,000.




• Investments in a Certified Indiana Funding Fund: 20% of the
  funding quantity (e.g., $20,000 tax credit score out there for a
  $100,000 whole funding), as much as an annual tax credit score quantity of
  $5,000,000.

The overall quantity of Indiana VCI Program tax credit out there to
all buyers in every fiscal 12 months is capped at $20,000,000, of
which as much as $7,500,000 could also be issued for investments in Certified
Indiana Funding Funds.

Previous to 2022, (1) the whole quantity of tax credit out there
underneath the Indiana VCI Program per 12 months was $12,500,000, and (2) the
quantity of the tax credit score out there to an investor underneath the Indiana
VCI Program in a calendar 12 months was 20% of the funding quantity, up
to a complete lifetime tax credit score quantity of $1,000,000 —
no matter whether or not the enterprise was a W/MBE. Funding funds
weren’t eligible for the tax credit score.

Traders contemplating an funding in an Indiana enterprise or
funding fund ought to ask the enterprise or funding fund whether or not
an Indiana VCI Program tax credit score could also be out there to them.
Out-of-state buyers who don’t file Indiana tax returns ought to
additionally inquire, as it’s potential to promote an Indiana VCI Program tax
credit score to an Indiana taxpayer.

Taft’s Enterprise Capital and Rising Corporations apply group
has a wealth of expertise in all features of enterprise capital
transactions. Contact certainly one of Taft’s Indiana-based Enterprise Capital attorneys for
extra info on learn how to reap the benefits of the Indiana VCI
Program, as a startup or investor.

Taft affiliate Ed Bellows (admission pending) contributed to
this text.

The content material of this text is meant to supply a basic
information to the subject material. Specialist recommendation needs to be sought
about your particular circumstances.