2023 Tennessee Code › Title 4 - STATE GOVERNMENT (§§ 4-1-101 — 4-58-110) › Chapter 28 - TENNESSEE SMALL BUSINESS INVESTMENT COMPANY CREDIT ACT (§§ 4-28-101 — 4-28-115) › Section 4-28-109 - Payment of profit share percentage or end date profit share percentage - Transfers from the general fund to the Tennessee rural opportunity fund and the small and minority owned business assistance program fund - Distribution of investment returns - Minimizing any related federal tax obligation

(a)
(1)
(A)
Prior to or on the program end date, at any time that the TNInvestco makes distributions, other than qualified distributions or distributions representing repayments of capital contributions, to its equity investors, the qualified TNInvestco shall pay to the state the profit share percentage. After the program end date, at any time that the TNInvestco makes distributions, other than qualified distributions or distributions representing repayments of capital contributions, to its equity investors, the qualified TNInvestco shall pay to the state the end date profit share percentage. Any such payments shall be deposited into the general fund until such time as the department of finance and administration certifies that the total amount of payments deposited in the general fund equals the total amount of revenue forgone pursuant to the credits used as provided in §
4-28-103
. Any payments made in excess of the amount of revenue forgone shall be deposited into the Tennessee rural opportunity fund and the small and minority-owned business assistance program fund to further support the state's economic development efforts.
(B)
The department shall obtain all necessary information from each TNInvestco to support the state's profit share percentage or the end date profit share percentage. Information provided to the department pursuant to this section shall be kept confidential due to the proprietary nature of such information.
(2)
After the department of finance and administration has provided its certification pursuant to subdivision (a)(1), any additional state revenue generated and deposited into the general fund as a result of this chapter through sales and use taxes, franchise and excise taxes, business taxes or any other source of revenue shall be identified by the department of revenue. The amount of this additional revenue shall be certified by the department of revenue on an annual basis and an amount equivalent to the certified amount shall be transferred from the general fund and seventy-five percent (75%) of such amount shall be transferred to the Tennessee rural opportunity fund and twenty-five percent (25%) of such amount shall be transferred to the small and minority-owned business assistance program fund.
(b)
Following the seventh anniversary of the fund, investment returns (profits and the portion of the base investment amount) may be distributed as liquidity permits; provided, that no more than twenty-five percent (25%) of the TNInvestco's base amount may be distributed in any one (1) year until the end of the investment period, at which time all of the fund's proceeds may be distributed as liquidity permits.
(c)
The TNInvestco and the state shall structure the qualified distributions and final payments in a manner that minimizes any related federal tax obligation. To the extent that the profit share distribution to qualified TNInvestco investors is less than the state's share, pursuant to the profit share percentage, due to federal income tax liabilities, the final payments may be adjusted to equalize the post-tax profit share payments made during the investment period.
Amended by 2021 Tenn. Acts, ch. 510, Secs.s3, s4 eff. 5/25/2021.
Amended by 2014 Tenn. Acts, ch. 611, s 2, eff. 7/1/2014.
Acts 2009 , ch. 610, § 10; 2010 , ch. 1142, §§ 28, 29.