On August 10, 2016, Governor Baker signed HB4569 into law, creating a tax credit program intended to spur angel investments into local high-tech start-ups, particularly those in the fields of digital e-health, information technology and healthcare. The program will permit investors in qualifying businesses to take a tax credit of 20% of the amount invested – or 30% if the business is in a Gateway Municipality. This tax credit program is limited to $25 million annually, with the credits being doled out by theMassachusetts Life Sciences Center.
Companies wishing to be qualified for the program must have (i) a principal place of business in Massachusetts, (ii) a fully-developed business plan with short- and long-term forecasts including R&D, profit and loss, cash flow and details of angel investor funding, (iii) 20 or fewer full-time employees (at least half of whom work out of the company’s principal place of business), and (iv) less than $500,000 in gross revenue in the prior fiscal year.
The program does not cover investments in hedge funds, venture capital funds, retail operations, real estate, professional services, gaming or financial services.
Investors must be accredited investors, as defined by the SEC. Their qualifying investments are limited to $125,000 in any one business per year and $250,000 total for any one business. No single taxpayer can claim more than $50,000 in tax credits in a year but investors may defer claiming tax credits for up to three years. Qualifying investors may not be the principal owner of the business and be involved in it on a full-time basis. More...
