What the Louisiana Angel Tax Credit means for you
- July 11th, 2011 /
Last Friday HB 597, the Angel Investor Credit Program was signed into law by Gov. Jindal. I fully expect this incentive to have a major impact on the flow of early-stage risk capital in Louisiana, but its important that you understand it and get an early jump in it to be best positioned to benefit. Now its time to figure out what this means for you.
Here are the bullet points:
- A credit of 35% of the money invested by an accredited angel investor in a certified Louisiana business, credit delayed by 24 months
- Credits capped at $1 million per year and $2 million total per business.
- The total angel investor rebates are capped at $5 million.
- Credit is transferable.
- Program effective from Jan. 1, 2011, through July 1, 2015.
Beyond this, I have been getting some questions for clarification so I reached out to Erich Rapp at Kean Miller. My questions and his responses are below.
1) The company has to be a Louisiana based company – can the investor be anywhere since it’s transferable?
It would appear that the investor could be from anywhere. I see no prohibition on out of state residents investing in Louisiana companies and I would not think that the La DED would object to having someone from another state invest in a Louisiana business.
2) Can the investor credit pass through to angel groups?
The credit can be earned by an individual or an “entity” such as the South Coast Angel Fund or Launch Pad Ignition. It could then be transferred to the owners of those angel investor groups or the benefits might be passed to those individuals automatically depending on the tax status of those entities
3) Does the 5m available prorate or is it first come first serve? What is the most opportune time to file?
The Act authorizes the La DED to determine the allocation method. They are expressly authorized to use a first come, first serve method, but it does not appear they are required to use that method. Anyone that wants the credits should probably get an application in as soon as the state will take such applications.
Have further questions? Did I miss something? Let me know in the comments.
- categories: All, Interviews, New Orleans /
Jul 11, 2011 at 7:36 pm
Very refreshing, forward thinking on the part of the LA state government. This bill is a relatively small investment today that will bring huge benefits to Louisiana tomorrow.
Jul 12, 2011 at 5:41 pm
Hi Chris, we truly believe that we have a unique concept that is based on the Louisiana Restaurant industry and their surroudning businesses.
I have already trademarked the names and have worked extensively on the business plan for some time now. I even recently sold my restaurant to pursue this full time.
We are looking for an investor/s or a program that can help us kick start this venture.
We would welcome any feed back.
Thank you,
Mark
Jul 18, 2011 at 5:39 pm
wow. after they shockingly ‘let it die’ a couple years back, i honestly thought it was gone forever. this is a big deal for early stage companies. would love to know who fought to get it back in place. thanks for the breakdown chris.
Jul 18, 2011 at 6:30 pm
What is meant by “the credit is delayed by 24 months”?
Jul 18, 2011 at 6:45 pm
I believe that the credit isn’t available to be exercised with the state for 2 years. This was done to reduce the fiscal impact of the bill to the current budget. I’m assuming the credit would still be monetizable through a broker earlier, but the discount would likely reflect this.