Startup Investors – Illinois Angel Investment Credit Expires December 31, 2016

Illinois investors! Time is running out to take advantage of the Illinois Angel Investment Credit Program, which is scheduled to expire on December 31, 2016.

Launched in 2011 by the Illinois Department of Commerce and Economic Opportunity (DCEO),the Illinois Angel Investment Credit Program attracts and encourages investment dollars into early-stage, innovative companies throughout Illinois. Investments provide these companies with much needed access to working capital to further their growth and success in our state. The Program is allocated $10 million in tax credits annually, from 2011 through 2016. Tax credits are awarded on a first-come, first-served basis.

Eligibility

To qualify for the credit, an investor must make an equity investment in a registered Qualified New Business Venture approved by the DCEO.

• The maximum amount of an investment that is eligible for the credit is $2 million per Qualified New Business Venture, and investors may aggregate the amount of the tax credits claimed, up to $10 million.
• Funds must remain invested in the Qualified New Business Venture for at least three years.
• Investments made before a business is a registered Qualified New Business Venture do not qualify for the credit. 
• If an investor places $100,000 into an eligible business, they would receive a $25,000 tax credit. 
• While the tax credit may not exceed the taxpayer's Illinois income tax liability for the taxable year, the credit may be carried forward for up to five years following the excess credit year.
• Tax credits cannot be sold or otherwise transferred to another person or entity.

Restrictions

Certain businesses are ineligible to be designated a Qualified New Business Venture, such as those principally engaged in real estate development, insurance, banking, lending and lobbying.

Opportunity

Application must be made to the Illinois DCEO for this benefit. Because of the sun setting, and the limit on available awards, we expect the credit awards to be more competitive later in the year. Consequently, we recommend that applications be filed as soon as practicable.