“Investors rejoiced when Minnesota finally passed a five year, $50 million angel tax credit. Only one problem: the state’s largest angel group will be largely shut out.
Under a last minute provision inserted into the bill, investors participating in angel deals through individual retirement accounts and family trusts will not be eligible for the tax credit this year. That spells bad news for Rain Source Capital in St. Paul, where most of its funds list an IRA or trust as a member.”
Since April 1st, many entrepreneurs and investors alike have been asking all the right questions: what exactly does the passing of the Angel Tax Credit imply from the tax & accounting perspective? And what happens next? What does it really mean for Minnesota?
Updated 4/19/10: added – MOJO Gude to AITC
Updated July: DEED/Angel site goes live!
Join us for a behind the scenes perspective on the experiences from one Minnesota Angel Investor who has been advocating Minnesota Angel Tax Credits for the past 9 years. Learn about the nuances of the bill and the vision moving forward from of Minnesota’s most public Angel Investors, John Alexander. Mr. Alexander is Chairman and Founder of Twin Cities Angels and President at Business Development Advisors, Inc. (no website).
What it means on paper, technically: The Minnesota Department of Employment and Economic Development (DEED) has a solid primer on the parameters that entrepreneurs and investors need to know about HF 2695.3 (see: Small Business Investment Tax Credit Statute - section II). Those interested in taking advantage of Minnesota’s Angel Investor Tax Credit should consult with their respective counsel.
What’s next? From the sounds of things, DEED will have their official application site up and running between June 1st and August 1st. Qualifying as a business and/or an investor is the next step.
What does it really mean for Minnesota? Well, that’s the big question; ultimately, it’s up to both the entrepreneurs and those with a financial interest in the tech community to determine how they want to capitalize on this this win. Only time will tell where and to what extent the passage of this bill impacts the early stage markets (and so on). Stay tuned…
“Passing an angel investment tax credit in Minnesota is not important just for the dollar amount but to signal to investors in the Midwest, and indeed the rest of the country, that our state is a serious place to do business; that we are ready to embrace (finally) a commonly accepted way to spur investment in promising high tech start-ups.
So in other words, something is better than nothing. We need to start somewhere. I need to remind myself this after reviewing the latest version of the bill emerging from the House.”
“ST. PAUL, Minnesota– For all of her fierce opposition to angel tax credits, Rep. Ann Lenczewski (D-Bloomington) now has a more pressing issue to focus on: how to pay for them.
Legislative sources say the question has moved beyond passing the bill to financing it. By one estimate, the credit enjoys the support of 100 lawmakers in the 136-member Minnesota House. But like anything else in Minnesota politics, it ain’t over till is over.”
By Eric Kelsey, Twin Cities Business
“In his annual State of the State address, Governor Tim Pawlenty on Thursday urged the Minnesota Legislature to approve an angel investor tax credit.
In his speech, Pawlenty did not provide details about the angel investor tax credit, but he indicated that the tax credit would be one of the six priorities of his proposed “jobs creation” bill.”
“ST. PAUL, Minnesota– In a packed State Building Office hearing room Tuesday, witness after witness rose to speak in support of H.F. 2750, a bill that would grant $32 million in tax credits over three years to angel investors who fund risky, high tech start-up companies. Entrepreneurs, investors, university officials, industry groups warned lawmakers that the lack of early stage capital meant innovative start-ups in Minnesota would either die or move to another state.”
“ST. PAUL, Minnesota– I’ll say this about Rep. Ann Lenczewski: she certainly makes Minnesota politics interesting.
The powerful chairwoman of the House Tax Committee, a long time opponent of tax credits for angel investors, has finally embraced the idea, just not the bill actually supported by angel investors like Twin Cities Angels and Rain Source Capital and other groups like the Minnesota High Tech Association, LifeScience Alley, and the University of Minnesota.“
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