ating the success of the angel group developed using the 
grant funds. 
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There 
is authorized to be appropriated to carry out this section 
$1,500,000, for each of fiscal years 2007 through 2009. 
‘‘SEC. 384. DEFINITIONS. 
‘‘In this part: 
‘‘(a) The term ‘angel group’ means two or more angel 
investors organized for the purpose of making investments 
in local or regional small business concerns that— 
‘‘(1) consists primarily of angel investors; 
‘‘(2) requires angel investors to be accredited 
investors; and 
‘‘(3) actively involves the angel investors in 
evaluating and making decisions about making in-
vestments. 
‘‘(b) The term ‘angel investor’ means an individual 
who— 
‘‘(1) on the basis of such factors as financial 
sophistication, income, net worth, knowledge, and 
experience in financial matters, or amount of assets 
under management, qualifies as an accredited inves-
tor under rules and regulations prescribed by the 
Commissioner of the Securities and Exchange Com-
mission; and
‘‘(2) provides capital to or makes investments 
in a small business concern.’’. 
SEC. 3. TAX CREDIT FOR SMALL BUSINESS INVESTMENT. 
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to nonrefundable personal credits) is 
amended by inserting after section 25D the following new 
section: 
‘‘SEC. 25E. SMALL BUSINESS INVESTMENT. 
‘‘(a) IN GENERAL.—In the case of an individual, 
there shall be allowed as a credit against the tax imposed 
by this chapter an amount equal to 20 percent of the 
amount paid or incurred for qualified small business in-
vestments during the taxable year. 
‘‘(b) LIMITATION.—With respect to any qualified 
small business investment in any corporation or partner-
ship, the amount paid or incurred by any taxpayer which 
is taken into account under subsection (a) shall not exceed 
$250,000 ($500,000 in the case of a joint return), reduced 
by the amount taken into account under such subsection 
with respect to investments by the taxpayer in such cor-
poration or partnership for all prior taxable years. 
‘‘(c) QUALIFIED SMALL BUSINESS INVESTMENT.— 
For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified small 
business investment’ means any small business stock 
and any small business partnership interest. 
‘‘(2) SMALL
BUSINESS
STOCK.—The term 
‘small business stock’ means any stock in a domestic 
corporation acquired by the taxpayer at its original 
issue (directly or through an underwriter) solely in 
exchange for cash, if— 
‘‘(A) such corporation is an eligible small 
business (as defined in section 41(b)(3)(D)(ii)), 
‘‘(B) such corporation is engaged primarily 
in the trade or business of manufacturing, proc-
essing, assembling, or researching and devel-
oping products or in the trade or business of 
agriculture, technology, or life science, 
‘‘(C) such corporation has been in exist-
ence for less than 5 years as of such acquisi-
tion, 
‘‘(D) such corporation has fewer than 75 
employees as of such acquisition, 
‘‘(E) more than 50 percent of the corpora-
tion’s employees perform substantially all of 
their services in the United States as of such 
acquisition, and
‘‘(F) such stock is designated by the cor-
poration for purposes of this paragraph. 
For purposes of subparagraph (E), stock shall not 
be treated as designated if such designation would 
result in the aggregate amount which may be taken 
into account under this section with respect to stock 
issued by such corporation to exceed $750,000, tak-
ing into account all taxpayers for all taxable years. 
‘‘(3) SMALL
BUSINESS
PARTNERSHIP
INTER-
EST.—The term ‘small business partnership interest’ 
means any capital or profits interest in a domestic 
partnership acquired by the taxpayer from the part-
nership solely in exchange for cash, if— 
‘‘(A) such partnership is an eligible small 
business (as defined in section 41(b)(3)(D)(ii)), 
‘‘(B) such partnership is engaged primarily 
in the trade or business of manufacturing, proc-
essing, assembling, or researching and devel-
oping products or in the trade or business of 
agriculture, technology, or life science, 
‘‘(C) such partnership has been in exist-
ence for less than 5 years as of such acquisi-
tion, 
‘‘(D) such partnership has fewer than 75 
employees as of such acquisition,