I 

113TH CONGRESS 

1ST SESSION H. R. 122 

To amend the Internal Revenue Code of 1986 to allow a credit against 

income tax for equity investments in high technology small business concerns. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 3, 2013 

Mr. HOLT introduced the following bill; which was referred to the Committee 

on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to allow a 

credit against income tax for equity investments in high 

technology small business concerns. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Creating Jobs From 

5 Innovative Small Businesses Act of 2013’’. 

6 SEC. 2. CREDIT FOR INVESTMENTS IN SMALL TECHNOLOGY 

7 INNOVATION COMPANIES. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 is amended by adding at the end the following new 

2 section: 

3 ‘‘SEC. 45S. HIGH TECHNOLOGY INVESTMENT TAX CREDIT. 

4 ‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec5 tion 38, the high technology investment tax credit deter6 mined under this section for the taxable year is an amount 

7 equal to 20 percent of the amount paid by the taxpayer 

8 during such year to acquire a qualified equity investment 

9 in a qualified high technology small business concern. 

10 ‘‘(b) MAXIMUM CREDIT.— 

11 ‘‘(1) IN GENERAL.—The taxpayer’s credit de12 termined under this section for the taxable year 

13 shall not exceed the excess (if any) of— 

14 ‘‘(A) $100,000, over 

15 ‘‘(B) the taxpayer’s (and any prede16 cessor’s) aggregate credit determined under this 

17 section for all prior taxable years. 

18 ‘‘(2) RELATED PARTIES.— 

19 ‘‘(A) IN GENERAL.—For purposes of para20 graph (1), all related persons shall be treated as 

21 1 person, and the dollar amount in paragraph 

22 (1)(A) shall be allocated among such persons 

23 under regulations prescribed by the Secretary. 

24 ‘‘(B) RELATED PERSONS.—A person shall 

25 be treated as related to another person if the 


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1 relationship between such persons would result 

2 in the disallowance of losses under section 267 

3 or 707(b). 

4 ‘‘(c) DEFINITIONS.—For purposes of this section— 

5 ‘‘(1) QUALIFIED EQUITY INVESTMENT.— 

6 ‘‘(A) IN GENERAL.—The term ‘qualified 

7 equity investment’ means any equity investment 

8 in a qualified high technology small business 

9 concern if— 

10 ‘‘(i) such investment is acquired by 

11 the taxpayer at its original issue (directly 

12 or through an underwriter) solely in ex13 change for cash, and 

14 ‘‘(ii) such investment is designated for 

15 purposes of this section by such concern. 

16 ‘‘(B) EQUITY INVESTMENT.—The term 

17 ‘equity investment’ means— 

18 ‘‘(i) any stock (other than non19 qualified preferred stock as defined in sec20 tion 351(g)(2)) in an entity which is a cor21 poration, and 

22 ‘‘(ii) any capital interest in an entity 

23 which is a partnership. 


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1 ‘‘(C) REDEMPTIONS.—A rule similar to the 

2 rule of section 1202(c)(3) shall apply for pur3 poses of this subsection. 

4 ‘‘(2) QUALIFIED HIGH TECHNOLOGY SMALL

5 BUSINESS CONCERN.—The term ‘qualified high tech6 nology small business concern’ means, with respect 

7 to any taxable year, any small business concern (as 

8 defined in section 3 of the Small Business Act) if— 

9 ‘‘(A) such concern employs an average of 

10 fewer than 500 employees on business days dur11 ing such year, and 

12 ‘‘(B) at least 50 percent of the gross ex13 penditures of such entity for such year are re14 search or experimental expenditures under sec15 tion 174. 

16 ‘‘(d) NATIONAL LIMITATION ON AMOUNT OF INVEST17 MENTS DESIGNATED.— 

18 ‘‘(1) IN GENERAL.—There is a high technology 

19 investment tax credit limitation for each calendar 

20 year. Such limitation is— 

21 ‘‘(A) $500,000,000 for 2013, 

22 ‘‘(B) $750,000,000 for 2014 and 2015, 

23 and 

24 ‘‘(C) $1,000,000,000 for 2016 and 2017. 


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1 ‘‘(2) ALLOCATION OF LIMITATION.—The limita2 tion under paragraph (1) shall be allocated by the 

3 Secretary among qualified high technology small 

4 business concerns selected by the Secretary. 

5 ‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If 

6 the high technology investment tax credit limitation 

7 for any calendar year exceeds the aggregate amount 

8 allocated under paragraph (2) for such year, such 

9 limitation for the succeeding calendar year shall be 

10 increased by the amount of such excess. No amount 

11 may be carried under the preceding sentence to any 

12 calendar year after 2023. 

13 ‘‘(e) CERTAIN TAXPAYERS NOT ELIGIBLE.—No cred14 it shall be determined under this section for any equity 

15 investment in any qualified high technology small business 

16 concern made by any individual who, at the time of the 

17 investment, is— 

18 ‘‘(1) an employee of such concern, or 

19 ‘‘(2) a member of the family (within the mean20 ing of section 267(c)(4)) of an employee of such con21 cern. 

22 ‘‘(f) BASIS REDUCTION.—The basis of any qualified 

23 equity investment shall be reduced by the amount of any 

24 credit determined under this section with respect to such 


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1 investment. This subsection shall not apply for purposes 

2 of sections 1202, 1400B, and 1400F. 

3 ‘‘(g) REGULATIONS.—The Secretary shall prescribe 

4 such regulations as may be appropriate to carry out this 

5 section, including regulations— 

6 ‘‘(1) which prevent the abuse of the purposes of 

7 this section, 

8 ‘‘(2) which impose appropriate reporting re9 quirements, and 

10 ‘‘(3) which apply the provisions of this section 

11 to newly formed entities.’’. 

12 (b) CREDIT MADE PART OF GENERAL BUSINESS

13 CREDIT.—Subsection (b) of section 38 of such Code (re14 lating to current year business credit) is amended by strik15 ing ‘‘plus’’ at the end of paragraph (35), by striking the 

16 period at the end of paragraph (36) and inserting ‘‘, plus’’, 

17 and by adding at the end the following new paragraph: 

18 ‘‘(37) the high technology investment tax credit 

19 determined under section 45S.’’. 

20 (c) CLERICAL AMENDMENT.—The table of sections 

21 for subpart D of part IV of subchapter A of chapter 1 

22 of such Code is amended by adding at the end the fol23 lowing new item: 

‘‘Sec. 45S. High technology investment tax credit.’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to investments made after Decem3 ber 31, 2012, in taxable years ending after such date. 

Æ 


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