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EntreInn
Innovation & Entrepreneurship

Venture Capital Investment Tax Credit

Effective immediately, the IEDC will not be accepting Qualified Capital Investment Applications for Calendar Year 2017. The IEDC has reached the programs limit for calendar year 2017.   Indiana Code 6-3.1-24 sets the maximum annual proposed investment plans at twelve million five hundred thousand dollars ($12,500,000). 

Indiana’s Venture Capital Investment (VCI) Tax Credit helps quickly growing Indiana companies gain the access they need to capital by providing investors to an additional incentive to invest early-stage Indiana companies. Investors who provide qualified debt or equity capital to Indiana companies receive a credit against their Indiana tax liability.

Calculation of Credits
Through the VCI Tax Credit, Qualified Indiana Businesses are eligible to pass along a total tax credit to their investors that is equal to the lesser of 1.) 20 percent of their qualifying investment into Indiana firms or 2.) $1 million.

The amount of credit exceeds the taxpayer’s state tax liability for that taxable year, the taxpayer may carry over the excess credit for a period not to exceed the taxpayer’s following five taxable years. A taxpayer is not entitled to a carryback or a refund of any unused credit amount.

Eligibility
This credit is open to approved taxpayers and pass through entities. A business must first be certified by the IEDC as a Qualified Indiana Business. Next, the investor must submit a capital investment application for approval by the IEDC prior to making an investment. 

After the investment application is approved, the taxpayer may make a qualifying investment and submit supporting documentation to the IEDC for the investment to be certified. The taxpayer’s investment must be made within two years after the date on which the IEDC approves the investment plan.

Certification
Any current investor who or which holds a majority ownership position prior to the proposed investment in the Qualified Indiana Business generally is not eligible for the VCI tax credit. Any current investor who or which, as a result of making the proposed investment, will hold a majority ownership position generally is eligible for the VCI tax credit for the investment portion up to 50% ownership position.  An investor who or which does not hold any ownership position, and does not have a potential ownership position of any kind, prior to making the proposed investment generally is eligible for the VCI tax credit on the entire proposed investment regardless of proposed ownership position.

An investor may be an individual or an entity.  An investor holds an ownership position when such investor (1) could potentially derive a financial benefit from a tax credit when another investor claims such tax credit, or (2) has tacit or express control over the interests of another investor in the Qualified Indiana Business, and in either such case the combined interest of those investors constitutes an ownership position in the Qualified Indiana Business.  For the purpose of clarity, such benefit or control shall automatically be presumed to be associated with an individual investor in the following circumstances:  (a) with respect to the spouse and unemancipated children of such individual investor; (b) with respect to any trust, family limited partnership, family limited liability company or other estate planning entity, the beneficiaries, partners or members of which include such individual investor or such individual investor’s spouse or unemancipated children; and (c) with respect to any partnership, corporation, limited liability company, joint venture, association, trust, or other such organization in which such individual investor possesses any ownership interest.

Debt investments from financial institutions secured by a valid mortgage, security agreement or other agreement or document that establishes a collateral or security position for the financial institution that is senior to all collateral or security interests of other taxpayers that provide debt or equity capital to the Qualified Indiana Business do not qualify for VCI Tax Credits.  Further, debt investments may not qualify to the extent that principal be paid or repaid prior to the expiration of a period of at least thirty-six (36) months.

Apply Now

To apply to either become a Qualified Indiana Business or to have your investment verified, submit your application online. 

Indiana Company: Qualified Indiana Business Application
 
Investor: Qualified Capital Investment Application

Contact
Lee Robinson
LRobinson@iedc.in.gov