(a)  Upon making a capital investment in a small business development fund, a small business fund investor earns a vested right to a credit against the entity’s state tax liability that may be utilized on each credit allowance date of the capital investment in an amount equal to the applicable percentage for the credit allowance date multiplied by the purchase price paid to the small business development fund for the capital investment. The amount of the credit claimed by any entity shall not exceed the amount of the entity’s state tax liability for the tax year for which the credit is claimed. Any amount of credit that an entity is prohibited from claiming in a taxable year as a result of this section may be carried forward for a period of seven (7) years. It is the intent of this chapter that an entity claiming a credit under this section is not required to pay any additional tax that may arise as a result of claiming the credit.

Terms Used In Rhode Island General Laws 42-64.33-3

  • Applicable percentage: means zero percent (0%) for the first three (3) credit allowance dates, and twenty-one and one-half percent (21. See Rhode Island General Laws 42-64.33-2
  • Capital investment: means any equity or debt investment in a small business development fund by a small business fund investor that:

    (i)  Is acquired after July 5, 2019, at its original issuance solely in exchange for cash;

    (ii)  Has one hundred percent (100%) of its cash purchase price used by the small business development fund to make qualified investments in eligible businesses located in this state within three (3) years of the initial credit allowance date; and

    (iii)  Is designated by the small business development fund as a capital investment under this chapter and is certified by the corporation pursuant to § 42-64. See Rhode Island General Laws 42-64.33-2

  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Corporation: means the Rhode Island commerce corporation. See Rhode Island General Laws 42-64.33-2
  • Credit allowance date: means the date on which a capital investment is made and each of the five (5) anniversary dates of the date thereafter. See Rhode Island General Laws 42-64.33-2
  • Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
  • Purchase price: means the amount paid to the small business development fund that issues a capital investment that shall not exceed the amount of capital investment authority certified pursuant to § 42-64. See Rhode Island General Laws 42-64.33-2
  • Small business development fund: means an entity certified by the corporation under § 42-64. See Rhode Island General Laws 42-64.33-2
  • Small business fund investor: means an entity that makes a capital investment in a small business development fund. See Rhode Island General Laws 42-64.33-2
  • State: means the state of Rhode Island. See Rhode Island General Laws 42-64.33-2
  • State tax liability: means any liability incurred by any entity under § 44-17-1 et seq. See Rhode Island General Laws 42-64.33-2

(b)  No credit claimed under this section shall be refundable or saleable on the open market. Credits earned by or allocated to a partnership, limited liability company, or S corporation may be allocated to the partners, members, or shareholders of the entity for their direct use for state tax liability as defined in this chapter in accordance with the provisions of any agreement among the partners, members, or shareholders, and a small business development fund must notify the corporation of the names of the entities that are eligible to utilize credits pursuant to an allocation of credits or a change in allocation of credits or due to a transfer of a capital investment upon the allocation, change, or transfer. The allocation shall be not considered a sale for purposes of this section.

(c)  The corporation shall provide copies of issued certificates to the division of taxation.

History of Section.
P.L. 2019, ch. 88, art. 12, § 10.