The Advanced Industry Investment Tax Credit
About the Program
The Advanced Industry Investment Tax Credit program (C.R.S. 24-48.5-112) is currently accepting Advanced Industry Certification requests from investee (Qualified Small Business) companies. The tax credit helps Colorado’s advanced industry qualified businesses receive more capital from Colorado investors.
Current Program Status
- The program has fully utilized the authorized tax credit capacity of $750,000 as of 8/22/2018.
- We will re-open the “AI Tax Credit Investor Eligibility Check 2018-2022” on January 1, 2019.
- Investees are eligible to certify year round by accessing the “AI Tax Credit Investee Pre-Certification 2018-2022.”
- All businesses certified between 2014 and 2017 must re-certify as an investee company by completing a new application.
- Available Funding
Application Process and Tax Credit Funding
Applications must be submitted online via the OEDIT website. Investors begin with filling out the AI Tax Credit Investor Eligibility Check 2018-2022. Similarly, investees begin with filling out the AI Tax Credit Investee Pre-Certification 2018-2022. Al Tax Credits are processed on a first come, first served basis. Since applications can only be submitted after the transaction has taken place, investors are encouraged to submit their applications as soon as possible. If the statutory limit on tax credits for the program is reached, the program will suspend accepting tax credit applications until the first business day of the following year.
- Both the investor and the investee must have their own separate account (Create an account)
- Both the investor and the investee should View the Fact Sheet and Program Manual (check links & resources below). These documents contain step-by-step instructions on filling out the applications.
- The applications will be reviewed by OEDIT and the parties will be notified of the determination.
Investee (Qualified Small Business) Requirements and Eligibility
- Must have HQ in Colorado or 50% of employees
- Has gained less than $10M from third party investors since formation
- Has annual revenue of less than $5M
- Has been operating and generating revenue for less than 5 years
- Operates in an Advanced Industry
- Advanced Manufacturing
- Energy and Natural Resources
- Infrastructure Engineering
- Information Technology
We need to review the following documents when we review your application review:
- Statement of Good Standing
- Proof of Business Organization(articles of incorporation, certificate of partnership, etc.)
- Submission of the most recent year-end balance sheet
- Submission of all year-end income statements or income tax filings from formation, or the three most recent years
- Capitalization Table (click here for template)
- Third-Party Funding Table
- Term Sheet
Investor Requirements and Eligibility
- Application must be submitted within 90 days from initial date of investment, and all investment payments must be within the 90 days, and in the same calendar year
- Investment must be a qualified investment
- Common stock
- Preferred stock
- Interest in partnership
- Interest in LLC
- Equity security
- Convertible debt instrument
- Investor cannot be a C-Corp
- Investment must be at least $10,000 with the potential maximum tax credit amount of $50,000 (the tax credit application cannot be submitted until the funds are received by the investee)
- Investor must hold less than 30% immediately before investment
- Investor must hold less than 50% immediately after investment
- Investor must attest that the AITC was the incentive for making the investment
- A qualified investor may not claim more than one tax credit per investment in a qualified small business (in the same or different years)
- Investor must have a different FEIN/Tax Payer ID from investee company
- In coordination with investee company, the most recent Capitalization Table must be provided including: investor name, dollar amount invested, date of investment and percentage of voting power and/or equity
- In coordination with investee company, the most recent Term Sheet must be provided
(Note that it is permissible for the investee to certify after the investor has applied for the credit, however certifying before the application will greatly expedite the process.)
- If the business receiving the investment is not in a rural or economically distressed area, the tax credit to the investor is 25% of the qualified investment, up to the $50,000 maximum allowable tax credit amount (per investment).
- If the business receiving the investment is in a rural or economically distressed area the tax credit to the investor is 30% of the qualified investment, up to the $50,000 maximum allowable tax credit amount (per investment). (Clarification made on 8/8/2018). Enterprise Zone pre-certification
- If the investee company is located in an Rural or Enhanced Rural Enterprise Zone, they need to have a valid Enterprise Zone pre-certification number. This will result in a larger credit percentage – 30% of the investment instead of the standard 25%. (Clarification made on 8/8/2018)
- An investor can only claim one tax credit for an investment in a business for the lifetime of the program. However, an investor may apply for separate credits for investments in different companies.
- An investee may have multiple investors, each of whom can apply for the tax credit.
- Advanced Industry Investment Tax Credits are a credit against a Colorado state income tax liability. These credits are issued to the investor, not the investee. Credits must be used by the investor; they are not transferable or salable. Credits may be carried forward five years. Credits are not refundable.
Companies that are eligible for the Advanced Industry Tax Credit are also encouraged to learn about the Advanced Industries Accelerator Programs, which support critical industries in their various phases of growth.
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