‘‘(1) IN GENERAL.—There is an angel invest-
ment tax credit limitation of $500,000,000 for each 
of calendar years 2018 through 2022. 
‘‘(2) ALLOCATION OF LIMITATION.—The limita-
tion under paragraph (1) shall be allocated by the 
Secretary among qualified small business entities se-
lected by the Secretary. 
‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If 
the angel investment tax credit limitation for any 
calendar year exceeds the aggregate amount allo-
cated under paragraph (2) for such year, such limi-
tation for the succeeding calendar year shall be in-
creased by the amount of such excess. No amount 
may be carried under the preceding sentence to any 
calendar year after 2027. 
‘‘(f) APPLICATION WITH OTHER CREDITS.— 
‘‘(1) BUSINESS CREDIT TREATED AS PART OF 
GENERAL BUSINESS CREDIT.—Except as provided in 
paragraph (2), the credit which would be allowed 
under subsection (a) for any taxable year (deter-
mined without regard to this subsection) shall be 
treated as a credit listed in section 38(b) for such 
taxable year (and not allowed under subsection (a)). 
‘‘(2) PERSONAL CREDIT.— 
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‘‘(A) IN GENERAL.—In the case of an indi-
vidual who elects the application of this para-
graph, for purposes of this title, the credit al-
lowed under subsection (a) for any taxable year 
(determined after application of paragraph (1)) 
shall be treated as a credit allowable under sub-
part A for such taxable year. 
‘‘(B) LIMITATION BASED ON AMOUNT OF 
TAX.—In the case of a taxable year to which 
section 26(a)(2) does not apply, the credit al-
lowed under subpart A for any taxable year (de-
termined after application of paragraph (1)) by 
reason of subparagraph (A) shall not exceed the 
excess of— 
‘‘(i) the sum of the regular tax liabil-
ity (as defined in section 26(b)) plus the 
tax imposed by section 55, over 
‘‘(ii) the sum of the credits allowable 
under subpart A (other than this section) 
and section 27 for the taxable year. 
‘‘(C) CARRYFORWARD OF UNUSED CRED-
IT.—If the credit allowable under subsection (a) 
by reason of subparagraph (A) exceeds the limi-
tation imposed by section 26(a)(1) or subpara-
graph (B), whichever is applicable, for such tax-
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able year, reduced by the sum of the credits al-
lowable under subpart A (other than this sec-
tion) for such taxable year, such excess shall be 
carried to each of the succeeding 20 taxable 
years to the extent that such unused credit may 
not be taken into account under subsection (a) 
by reason of subparagraph (A) for a prior tax-
able year because of such limitation. 
‘‘(g) SPECIAL RULES.— 
‘‘(1) RELATED PARTIES.—For purposes of this 
section— 
‘‘(A) IN
GENERAL.—All related persons 
shall be treated as 1 person. 
‘‘(B) RELATED PERSONS.—A person shall 
be treated as related to another person if the 
relationship between such persons would result 
in the disallowance of losses under section 267 
or 707(b). 
‘‘(2) BASIS.—For purposes of this subtitle, the 
basis of any investment with respect to which a cred-
it is allowable under this section shall be reduced by 
the amount of such credit so allowed. This sub-
section shall not apply for purposes of sections 1202, 
1397B, and 1400B. 
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‘‘(3) RECAPTURE.—The Secretary shall, by reg-
ulations, provide for recapturing the benefit of any 
credit allowable under subsection (a) with respect to 
any qualified equity investment which is held by the 
taxpayer less than 3 years, except that no benefit 
shall be recaptured in the case of— 
‘‘(A) transfer of such investment by reason 
of the death of the taxpayer, 
‘‘(B) transfer between spouses, 
‘‘(C) transfer incident to the divorce (as 
defined in section 1041) of such taxpayer, or 
‘‘(D) a transaction to which section 381(a) 
applies (relating to certain acquisitions of the 
assets of one corporation by another corpora-
tion). 
‘‘(h) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be appropriate to carry out this 
section, including regulations— 
‘‘(1) which prevent the abuse of the purposes of 
this section, 
‘‘(2) which impose appropriate reporting re-
quirements, and 
‘‘(3) which apply the provisions of this section 
to newly formed entities.’’. 
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(b) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Subsection (b) of section 38 of the Internal 
Revenue Code of 1986 is amended— 
(1) in paragraph (35), by striking ‘‘plus’’; 
(2) in paragraph (36), by striking the period at 
the end and inserting ‘‘, plus’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(37) the portion of the angel investment tax 
credit to which section 30E(f)(1) applies.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 1016(a) of the Internal Revenue 
Code of 1986 is amended by striking ‘‘and’’ at the 
end of paragraph (36), by striking the period at the 
end of paragraph (37) and inserting ‘‘, and’’, and by 
inserting after paragraph (37) the following new 
paragraph: 
‘‘(38) to the extent provided in section 
30E(g)(2).’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by add-
ing at the end the following new item: 
‘‘Sec. 30E. Angel investment tax credit.’’. 
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(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to investments made after Decem-
ber 31, 2017, in taxable years ending after such date. 
(f) REGULATIONS
ON ALLOCATION
OF NATIONAL 
LIMITATION.—Not later than 120 days after the date of 
the enactment of this Act, the Secretary of the Treasury 
or the Secretary’s delegate shall prescribe regulations 
which specify— 
(1) how small business entities shall apply for 
an allocation under section 30E(e)(2) of the Internal 
Revenue Code of 1986, as added by this section; 
(2) the competitive procedure through which 
such allocations are made; 
(3) the criteria for determining an allocation to 
a small business entity, including— 
(A) whether the small business entity is lo-
cated in a State that is historically underserved 
by angel investors and venture capital investors; 
(B) whether the small business entity has 
received an angel investment tax credit, or its 
equivalent, from the State in which the small 
business entity is located and registered; 
(C) whether small business entities in low- 
, medium-, and high-population density States 
are receiving allocations; and 
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