What the Louisiana Angel Tax Credit means for you
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.