In this task, you are given text for US Congressional and California state bills, your task is to generate a summary for this bill.
Q: SECTION 1. SHORT TITLE.

This Act may be cited as the ''Invest in Innovative Small
Businesses Act''.

SEC. 2. ANGEL INVESTMENT TAX CREDIT.

(a) In General.--Subpart B of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:

''SEC. 30E. ANGEL INVESTMENT TAX CREDIT.

''(a) Allowance of Credit.--There shall be allowed as a credit
against the tax imposed by this chapter for the taxable year an amount
equal to 25 percent of the qualified equity investments made by a
qualified investor during the taxable year.
''(b) Qualified Equity Investment.--For purposes of this section--
''(1) In general.--The term 'qualified equity investment'
means any equity investment in a qualified small business
entity if--
''(A) such investment is acquired by the taxpayer
at its original issue (directly or through an
underwriter) solely in exchange for cash, and
''(B) such investment is designated for purposes of
this section by the qualified small business entity.
''(2) Equity investment.--The term 'equity investment'
means--
''(A) any form of equity, including a general or
limited partnership interest, common stock, preferred
stock (other than nonqualified preferred stock as
defined in section 351(g)(2)), with or without voting
rights, without regard to seniority position and
whether or not convertible into common stock or any
form of subordinate or convertible debt, or both, with
warrants or other means of equity conversion, and
''(B) any capital interest in an entity which is a
partnership.
''(3) Redemptions.--A rule similar to the rule of section
1202(c)(3) shall apply for purposes of this subsection.
''(c) Qualified Small Business Entity.--For purposes of this
section--
''(1) In general.--The term 'qualified small business
entity' means any domestic corporation or partnership if such
corporation or partnership--
''(A) is a small business (as defined in section
41(b)(3)(D)(iii)),
''(B) has its headquarters in the United States,
''(C) is engaged in a high technology trade or
business related to--
''(i) advanced materials, nanotechnology,
or precision manufacturing,
''(ii) aerospace, aeronautics, or defense,
''(iii) biotechnology or pharmaceuticals,
''(iv) electronics, semiconductors,
software, or computer technology,
''(v) energy, environment, or clean
technologies,
''(vi) forest products or agriculture,
''(vii) information technology,
communication technology, digital media, or
photonics,
''(viii) life sciences or medical sciences,
''(ix) marine technology or aquaculture,
''(x) transportation, or
''(xi) any other high technology trade or
business as determined by the Secretary,
''(D) has been in existence for less than 5 years
as of the date of the qualified equity investment,
''(E) employs less than 100 full-time equivalent
employees as of the date of such investment,
''(F) has more than 50 percent of the employees
performing substantially all of their services in the
United States as of the date of such investment, and
''(G) has equity investments designated for
purposes of this paragraph.
''(2) Designation of equity investments.--For purposes of
paragraph (1)(G), an equity investment 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 equity investments in such corporation or
partnership exceeds--
''(A) $10,000,000, taking into account the total
amount of all qualified equity investments made by all
taxpayers for the taxable year and all preceding
taxable years,
''(B) $2,000,000, taking into account the total
amount of all qualified equity investments made by all
taxpayers for such taxable year, and
''(C) $1,000,000, taking into account the total
amount of all qualified equity investments made by the
taxpayer for such taxable year.
''(d) Qualified Investor.--For purposes of this section--
''(1) In general.--The term 'qualified investor' means an
accredited investor, as defined by the Securities and Exchange
Commission, investor network, or investor fund who review new
or proposed businesses for potential investment.
''(2) Investor network.--The term 'investor network' means
a group of accredited investors organized for the sole purpose
of making qualified equity investments.
''(3) Investor fund.--
''(A) In general.--The term 'investor fund' means a
corporation that for the applicable taxable year is
treated as an S corporation or a general partnership,
limited partnership, limited liability partnership,
trust, or limited liability company and which for the
applicable taxable year is not taxed as a corporation.
''(B) Allocation of credit.--
''(i) In general.--Except as provided in
clause (ii), the credit allowed under
subsection (a) shall be allocated to the
shareholders or partners of the investor fund
in proportion to their ownership interest or as
specified in the fund's organizational
documents, except that tax-exempt investors
shall be allowed to transfer their interest to
investors within the fund in exchange for
future financial consideration.
''(ii) Single member limited liability
company.--If the investor fund is a single
member limited liability company that is
disregarded as an entity separate from its
owner, the credit allowed under subsection (a)
may be claimed by such limited liability
company's owner, if such owner is a person
subject to the tax under this title.
''(4) Exclusion.--The term 'qualified investor' does not
include--
''(A) a person controlling at least 50 percent of
the qualified small business entity,
''(B) an employee of such entity, or
''(C) any bank, bank and trust company, insurance
company, trust company, national bank, savings
association or building and loan association for
activities that are a part of its normal course of
business.
''(e) National Limitation on Amount of Investments Designated.--
''(1) In general.--There is an angel investment tax credit
limitation of $500,000,000 for each of calendar years 2018
through 2022.
''(2) Allocation of limitation.--The limitation under
paragraph (1) shall be allocated by the Secretary among
qualified small business entities selected by the Secretary.
''(3) Carryover of unused limitation.--If the angel
investment tax credit limitation for any calendar year exceeds
the aggregate amount allocated under paragraph (2) for such
year, such limitation for the succeeding calendar year shall be
increased 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
(determined 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.--
''(A) In general.--In the case of an individual who
elects the application of this paragraph, for purposes
of this title, the credit allowed under subsection (a)
for any taxable year (determined after application of
paragraph (1)) shall be treated as a credit allowable
under subpart 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 allowed under subpart A for any
taxable year (determined after application of paragraph
(1)) by reason of subparagraph (A) shall not exceed the
excess of--
''(i) the sum of the regular tax liability
(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 credit.--If the credit
allowable under subsection (a) by reason of
subparagraph (A) exceeds the limitation imposed by
section 26(a)(1) or subparagraph (B), whichever is
applicable, for such taxable year, reduced by the sum
of the credits allowable under subpart A (other than
this section) 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 taxable 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 credit is allowable
under this section shall be reduced by the amount of such
credit so allowed. This subsection shall not apply for purposes
of sections 1202, 1397B, and 1400B.
''(3) Recapture.--The Secretary shall, by regulations,
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 corporation).
''(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 requirements, and
''(3) which apply the provisions of this section to newly
formed entities.''.
(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 adding at the end the following new item:

''Sec. 30E. Angel investment tax credit.''.
(e) Effective Date.--The amendments made by this section shall
apply to investments made after December 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 located 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
(D) whether the small business entity has been
awarded a Small Business Innovative Research or Small
Business Technology Transfer grant from a Federal
agency;
(4) the actions that such Secretary or delegate shall take
to ensure that such allocations are properly made to qualified
small business entities; and
(5) the actions that such Secretary or delegate shall take
to ensure that angel investment tax credits are allocated and
issued to the taxpayer.
(g) Audit and Report.--Not later than January 31, 2021, the
Comptroller General of the United States, pursuant to an audit of the
angel investment tax credit program established under section 30E of
the Internal Revenue Code of 1986 (as added by subsection (a)), shall
report to Congress on such program, including all qualified small
business entities that receive an allocation of an angel investment
credit under such section.
A:
Invest in Innovative Small Businesses Act This bill amends the Internal Revenue Code to allow a new business-related tax credit equal to 25% of the equity investments made by a qualified investor in a domestic corporation or partnership that: is a small business, has its headquarters in the United States, is engaged in a specified high technology trade or business, has been in existence for less than 5 years, employs fewer than 100 full-time employees, has more than 50% of its employees performing substantially all of their services in the United States, and has certain equity investments designated for the purposes of this bill that do not exceed specified amounts. The bill limits the allowable amount of such credit to the excess of the sum of regular tax liability, plus the tax under provisions regarding the alternative minimum tax, over the sum of specified tax credits allowed for the year. It also imposes an overall limitation on such credit of $500 million for each of calendar years 2018 through 2022.