us-nm/stat
NMSA 1978, § 7-2-18.17 — Angel investment credit
A.
A taxpayer who files a New Mexico income tax return, is not a dependent of
another taxpayer, is an accredited investor and makes a qualified investment may apply
for, and the department may allow, a claim for a credit in an amount not to exceed
twenty-five percent of the qualified investment; provided that a credit for each qualified
investment shall not exceed sixty-two thousand five hundred dollars ($62,500). The tax
credit provided in this section shall be known as the "angel investment credit".
B.
A taxpayer may claim the angel investment credit:
(1) for not more than one qualified investment per investment round;
(2) for qualified investments in no more than five qualified businesses per
taxable year; and
(3) for a qualified investment made on or before December 31, 2030.
C.
A taxpayer may claim an angel investment credit by submitting a completed
application to the department on forms and in a manner required by the department no
later than one year following the end of the calendar year in which the qualified
investment is made. A taxpayer shall not claim more than one credit for the same
qualified investment in the same investment round.
D.
Except as provided in Subsection J of this section, a taxpayer shall claim the
angel investment credit no later than one year following the date the completed
application for the credit is approved by the department.
E.
Applications and all subsequent materials submitted to the department related to
the application shall also be submitted to the economic development department.
F.
The department shall allow a maximum annual aggregate of two million dollars
($2,000,000) in angel investment credits per calendar year. Completed applications
shall be considered in the order received. Applications for credits that would have been
allowed but for the limit imposed by this subsection shall be allowed in subsequent
calendar years.
G.
The credit provided by this section shall be included in the tax expenditure
budget pursuant to Section 7-1-84 NMSA 1978, which shall include, at a minimum: the
number of accredited investors determined to be eligible for the credit in the previous
year; the names of those investors; the amount of credit for which each investor was
determined to be eligible; and the number and names of the businesses determined to
be qualified businesses for purposes of an investment by an accredited investor.
H.
A taxpayer who otherwise qualifies for and claims a credit pursuant to this
section for a qualified investment made by a partnership or other business association
of which the taxpayer is a member may claim a credit only in proportion to the
taxpayer's interest in the partnership or business association.
I.
Married individuals who file separate returns for a taxable year in which they
could have filed a joint return may each claim one-half of the credit that would have
been allowed on a joint return.
J.
The angel investment credit may only be deducted from the taxpayer's income
tax liability. Any portion of the tax credit provided by this section that remains unused at
the end of the taxpayer's taxable year may be carried forward for five consecutive years.
K.
As used in this section:
(1) "accredited investor" means a person who is an accredited investor within
the meaning of Rule 501 issued by the federal securities and exchange commission
pursuant to the federal Securities Act of 1933, as amended;
(2) "business" means a corporation, general partnership, limited partnership,
limited liability company or other similar entity, but excludes an entity that is a
government or a nonprofit organization designated as such by the federal government
or any state;
(3) "equity" means common or preferred stock of a corporation, a partnership
interest in a limited partnership or a membership interest in a limited liability company,
including debt subject to an option in favor of the creditor to convert the debt into
common or preferred stock, a partnership interest or a membership interest;
(4) "investment round" means an offer and sale of securities and all other
offers and sales of securities that would be integrated with such offer and sale of
securities under Regulation D issued by the federal securities and exchange
commission pursuant to the federal Securities Act of 1933, as amended;
(5) "manufacturing" means combining or processing components or materials
to increase their value for sale in the ordinary course of business, but does not include:
(a) construction;
(b) farming;
(c) processing natural resources, including hydrocarbons; or
(d) preparing meals for immediate consumption, on- or off-premises;
(6) "qualified business" means a business that:
(a) maintains its principal place of business and employs a majority of its full-
time employees, if any, in New Mexico and a majority of its tangible assets, if any, are
located in New Mexico;
(b) engages in qualified research or manufacturing activities in New Mexico;
(c) is not primarily engaged in or is not primarily organized as any of the
following types of businesses: credit or finance services, including banks, savings and
loan associations, credit unions, small loan companies or title loan companies; financial
brokering or investment; professional services, including accounting, legal services,
engineering and any other service the practice of which requires a license; insurance;
real estate; construction or construction contracting; consulting or brokering; mining;
wholesale or retail trade; providing utility service, including water, sewerage, electricity,
natural gas, propane or butane; publishing, including publishing newspapers or other
periodicals; broadcasting; or providing internet operating services;
(d) has not issued securities registered pursuant to Section 6 of the federal
Securities Act of 1933, as amended; has not issued securities traded on a national
securities exchange; is not subject to reporting requirements of the federal Securities
Exchange Act of 1934, as amended; and is not registered pursuant to the federal
Investment Company Act of 1940, as amended, at the time of the investment;
(e) has one hundred or fewer employees calculated on a full-time-equivalent
basis in the taxable year in which the investment was made; and
(f) has not had gross revenues in excess of five million dollars ($5,000,000)
in any fiscal year ending on or before the date of the investment;
(7) "qualified investment" means a cash investment in a qualified business for
equity, but does not include an investment by a taxpayer if the taxpayer, a member of
the taxpayer's immediate family or an entity affiliated with the taxpayer receives
compensation from the qualified business in exchange for services provided to the
qualified business within one year of investment in the qualified business; and
(8) "qualified research" means "qualified research" as defined by Section 41
of the Internal Revenue Code.
Source: official text