By Kenneth H. Bridges, CPA, PFS December 2013
Georgia legislation enacted in 2010 provides a Georgia tax credit of up to 35% of the amount invested in an early stage company (with utilization of the credit limited to $50,000 per year). The credit is claimed in the second year following the year the investment is made. It is available to accredited individuals and special purpose flow-through entities which are investment vehicles. A maximum of $10,000,000 per year of credit is available for the entire state. Qualified companies have to be less than three years old, employ fewer than 20 people, have less than $500,000 in revenue in any prior year, be headquartered in Georgia, have raised less than $1,000,000 in equity and debt financing (other than commercial loans), and cannot be engaged in retail, real estate, professional services, membership based activities, gambling, natural resource extraction, investment activities, insurance, entertainment, amusement, recreation, etc.
The credit was originally set to apply only to investments made in 2011 – 2013, but legislation enacted earlier this year has extended the credit for investments made in 2014 and 2015 (but reduced the statewide cap on such to $5,000,000 per year).
A qualified business must register with the Department of Revenue by submitting a Form IT-QBR, and a qualified investor seeking to claim the credit must submit Form IT-QI-AP between September 1 and October 31 of the year for which the credit is claimed.
Kenneth H. Bridges, CPA, PFS is a partner with Bridges & Dunn-Rankin, LLP an Atlanta-based CPA firm.
This article is presented for educational and informational purposes only, and is not intended to constitute legal, tax or accounting advice. The article provides only a very general summary of complex rules. For advice on how these rules may apply to your specific situation, contact a professional tax advisor.