SB 590 — Angel Investment for Small Businesses.

FILED SENATE GENERAL ASSEMBLY OF NORTH CAROLINA AprSESSION 4, 2023 S.B.S 1 SENATE BILL 590 Short Title:

590 SESSION 2023 PRINCIPAL CLERK S D SENATE BILL DRS45263-MCf-112 Short Title:

Rules and Operations of the Senate April 5, 2023 A BILL TO BE ENTITLED AN ACT TO CREATE A TAX INCENTIVE FOR ANGEL INVESTORS.

– An accredited investor as defined by the United States Securities and Exchange Commission who is (i) an individual person who is a resident of this State or a nonresident who is subject to taxes imposed bybythis this Chapter or (ii) a pass-through entityentitywhich which is formed for investment purposes, has no business operations, does not have committed capital under management exceeding five million dollars ($5,000,000), and is not capitalized with funds raised or pooled through private placement memoranda directed to institutional investors.

– A capital asset acquired bybyan an angel investor taxpayer who was eligible to claim the tax credit allowed pursuant to this section with respect to the acquisition.

– A registered business that (i) is either a corporation, limited liability company, or a general or limited partnership located in this *DRS45263-MCf-112**S590-v-1* General Assembly Of North Carolina Session 2023 State and has its headquarters located in this State at the time the investment was made and has maintained these headquarters for the entire time the qualified business benefitted from the tax credit provided for pursuant to this section, (ii) was organized no more than five years before the qualified investment was made, (iii) employs 25 or fewer people in this State at the time it is registered as a qualified business, (iv) has had in any complete fiscal year before registration gross income as determined in accordance with the Code of two million dollars ($2,000,000) or less on a consolidated basis, or (v) is primarily engaged in manufacturing, processing, warehousing, wholesaling, software development, information technology services, research and development, ora business providingprovidingservices services set forthin subsectorssubsectors621,622, 621,622, and 623 of NAICS;

If an individual's share of the pass-through entity's credit is limited due to the maximum allowable credit under this Chapter Page 2 DRS45263-MCf-112Senate Bill 590-First Edition General Assembly Of North Carolina Session 2023 for a taxable year, the pass-through entity and its owners may not reallocate the unused credit among the other owners.

(1) The total amount of credits allowed pursuant to this section may not exceed in the aggregate five million dollars ($5,000,000) for all taxpayers for anyanyone one calendar year.

(2) The aggregate amount of credit allowed an individual for one or more qualified investments in asingletaxableyearunderasingletaxable yearunder this section,section,whethermade whethermade directly or by a pass-through entity and allocated to an individual, shall not exceed one hundred thousand dollars ($100,000), not including any carry forward credits.

(4) The credit is transferrable bybythe the angel investor to his or her heirs and legatees upon his or her death and to his or her spouse or incident to divorce.

A tax credit or increment of a tax credit maymaybe be transferred onlyonlyonce. once.

The credit maymaybe be transferred to any taxpayer.

A taxpayer to whom a credit has been transferred maymayuse use the credit for the taxable year in which the transfer occurred and unused amounts may be carried forward to succeeding taxable years, but the transferred credit may not be used more than 10 years after it was originally issued.

InthisIn this case, thequalifiedbusinessthequalified business shall provide the Secretary with written notice of the merger, conversion, consolidation, or similar transaction and other information as required by the Secretary.

the number DRS45263-MCf-112Senate Bill 590-First Edition Page 3 General Assembly Of North Carolina Session 2023 of full-time, part-time, and temporarytemporaryjobs jobs created bybythe the businesses;

Page 4 DRS45263-MCf-112Senate Bill 590-First Edition