2023 Laws of Puerto Rico › TITLE SEVEN - Banking (§§ 1 — 3116) › PART III - Other Financial Institutions (§§ 551 — 1390) › Chapter 81 - Investment Capital Fund (§§ 1241 — 1260a) › § 1254 - Investment in proprietary interests of a fund—Credit

(a) Credit for investment in an investment capital fund or in a designated entity. —
(1) Every person who owns shares of a primary issue of eligible proprietary interests in one or several investment capital funds or in one or more designated entities as of the last day prescribed for the filing of his/her income tax return, including any extension authorized by the Secretary, may, at his/her option, take a credit applicable to the taxable year corresponding to that return, equal to no more than twenty-five percent (25%) of the total sum of his/her investment in eligible proprietary interests. Said credit shall be taken in the first taxable year for which said investment is deemed to be held. The credit shall be applied against the tax determined under the provisions of §§ 8401 et seq. of Title 13, including the minimum alternate tax and the basic alternate tax for individuals imposed under said sections.
(2) The investment credit allowed by this clause shall not be applicable, nor shall it be available, in the event that an investor acquires eligible proprietary interests of a fund or a designated entity, in a primary issue, to replace other eligible proprietary interests of a fund or of a designated entity which were sold, exchanged or otherwise transferred by said investor, and with respect to which the investor shall not acknowledge in whole or in part the gain derived from such sale, exchange or transfer, because he/she has complied with the requirements established in § 1255 of this title.
(b) Carry-over of investment credit. — The unclaimed amount of the credit referred to in subsection (a), may be carried over to any of the following five (5) taxable years, until the credit is exhausted or the five-year period expires, whichever occurs first.
(c) Adjustment of investment in eligible proprietary interests. — The tax base of the investment in a fund or in a designated entity determined in accordance with the provisions of §§ 8401 et seq. of Title 13, shall be reduced by the amount taken as a credit pursuant to subsections (a), (b) and (d) of this section.
(d) Assignment of credit. —
(1) The credit for investment provided by subsection (a) of this section may be granted, sold or otherwise transferred, in whole or in part, by an investor to any other person.
The person acquiring the credit may claim a credit against his/her income tax for the amount of the credit assigned.
(2) The tax base of the investment in a fund or a designated entity determined pursuant to the provisions of §§ 8401 et seq. of Title 13, shall be reduced by the amount of the investment credit assigned.
(3) The investor who has assigned his/her investment credit, in whole or in part, and the person acquiring said investment credit shall notify the Secretary of the assignment through a statement to such effects, which shall be included with their respective income tax returns for the year in which the assignment of the investment credit was made. The statement shall include such information required by the Secretary through regulations.
(4) The money or value of the property received in exchange for the investment credit shall be exempted from taxation under §§ 8401 et seq. of Title 13, up to a sum equal to the amount of the investment credit assigned.
History —Oct. 6, 1987, No. 3, p. 840, § 14; Apr. 6, 1989, No. 3, p. 6, § 1; renumbered as § 15 and amended on July 11, 1996, No. 70, § 15.