Minnesota Angel Tax Credit—Applications Now Available 

The Angel Investment Tax Credit is live and the Minnesota Department of Economic Development is now accepting applications from companies and potential investors to qualify for the Angel Investment Tax Credit.
 
Gray Plant Mooty was involved in helping promote the legislation for adoption. We have also assisted clients in taking advantage of similar programs in neighboring states. As a result, we are now well prepared to assist you in the administrative aspects of the Minnesota program. Much discussion has surrounded the "who/what/when/where/why's" of the program and there are a few key considerations to keep in mind.
 
The applications for funds, investors, and businesses to become qualified are now available. The forms are available on the Minnesota Department of Employment and Economic Development Web site.
 
In order to receive the tax credit (25% of qualified investment), a qualified investor or qualified fund must make an investment in a qualified small business. Once a qualified investor or qualified fund desires to make an investment, both the investor/fund and the business will jointly complete and submit the "Credit Allocation Application Form" which is also available on the DEED Web site. 

There are many requirements for qualification, including the following key examples:

• A 25 percent tax credit is available for investments in small, emerging businesses that have been operating for less than 10 years and do not have prior funding in excess of $2 million.
• Qualifying companies must be headquartered in Minnesota and have fewer than 25 employees, with at least 51 percent of the workers and total payroll based in the state.
• A maximum credit of $125,000 per person per year ($250,000 if married filing jointly) will be available.
• The credit is made by way of a state refund of credits against actual tax liability.
• Certain qualifications apply for certain types of industries seeking to qualify for the credit.

Because of the limited allocation of available credits ($11 million in 2010), there could be some urgency to apply for and to make a qualified investment. We are happy to answer any questions regarding what type of investor, fund, or company may qualify or any other questions related to your application or planning for a proposed transaction. Please contact Kermit Nash (612.632.3426) or Dan Tenenbaum (612.632.3050) with questions.