Income Tax Incentives
Angel Fund Investment Credit
An individual, estate, trust, partnership, corporation, or limited liability company is allowed an income tax credit for investing in an angel fund in North Dakota certified by the Department of Commerce Division of Economic Development and Finance.
The credit is equal to 45% of the investment, up to a maximum credit of $45,000 per year. An unused credit may be carried forward up to seven tax years. A taxpayer claiming this credit may not claim an income tax credit passed through to the taxpayer by the angel fund resulting from the angel fund's investment in a qualified business for purposes of the seed capital or agricultural commodity processing facility investment tax credit programs.
For credits based on investments made in an angel fund first certified on or after August 1, 2011, by the North Dakota Department of Commerce, a taxpayer may make an irrevocable election to sell, assign, or otherwise transfer up to $100,000 of unused credits. To qualify, both the investment on which the credit is based and the transfer must be made in the 2011 or 2012 tax year. (Note: This transfer provision expired at the end of the 2012 tax year, and no credits may be transferred after the end of the 2012 tax year.)
Lifetime credit limit. For credits based on investments made on or after January 1, 2011, a taxpayer is allowed no more than $150,000 in cumulative credits over the taxpayer's lifetime. Married individuals are treated as one taxpayer for this limit. This limit does not apply to credits acquired from another taxpayer under the sale, assignment, or transfer election.
See the following links for more information:
- Certification as North Dakota angel fund - To obtain certification as a North Dakota angel fund for purposes of the Angel Fund Investment Tax Credit Program, an Application For Certification As An Angel Fund must be completed and submitted to the North Dakota Commerce Department's Division of Economic Development and Finance.
- Program provisions - For a rundown of the Program's provisions, see Angel Fund Investment Tax Credit Program - Program provisions.
- Once certified, a North Dakota angel fund must report each qualified investment it receives by completing and submitting an Angel Fund Investment Reporting Form to the North Dakota Office of State Tax Commissioner.
- Credit rates, limitations, and other features by tax year - For a summary of the applicable rates, limitations, and other features on a year-by-year basis, see Angel Fund Investment Tax Credit Program - Rates, limitations, and other features of the tax credit by tax year.
- North Dakota angel fund investment tax credit statute (law) - For the text of the law, see N.D.C.C. § 57-38-01.26
- Annual reporting requirement for angel funds – Every North Dakota angel fund certified for purposes of the angel fund investment tax credit program under N.D.C.C. § 57-38-01.26 must file Form AFI, Angel Fund Investment Report, at the end each calendar year. For more information, see the instructions to the applicable year's Form AFI.
- Transfer of unused tax credit – – If an eligible taxpayer (transferor) elects to transfer an angel fund tax credit to another taxpayer (transferee), the transferor and transferee must jointly complete and file Form CTS, Credit Transfer Statement, with the North Dakota Office of State Tax Commissioner within thirty days after the date the transfer (or purchase) agreement is executed. (Note: The transfer provision expired at the end of the 2012 tax year, and no credits may be transferred after the end of the 2012 tax year.)
Questions relating to certification should be directed to the North Dakota Commerce Department's Division of Economic Development and Finance as follows:
North Dakota Commerce Department
Division of Economic Development and Finance
PO Box 2057
Bismarck ND 58503
Web site: http://www.business.nd.gov/