Illinois Administrative Code › Title 14 - COMMERCE › Part 531 - ANGEL INVESTMENT CREDIT PROGRAM › Section 531.20 - Definitions

Current through Register Vol. 48, No. 28, July 12, 2024
The following definitions are applicable to the Angel
				Investment Credit Program.
"Act" means the Illinois Income Tax Act [ 35 ILCS 5 ].
"Applicant" means a corporation, partnership, limited
				liability company, or a natural person that makes an investment in a qualified
				new business venture. The term "applicant" does not include a corporation,
				partnership, limited liability company, or a natural person who has a direct or
				indirect ownership interest of at least 51% in the profits, capital, or value
				of the
qualified new business venture receiving the
investment
				or a related member.
[
				35 ILCS
				5/220(a) ]
"Claimant" means an applicant certified by the
				Department who files a claim for a credit under Section
				531.50.
[
				35 ILCS
				5/220(a) ]
"Contingent equity investment" means money (or its equivalent)
				given to a qualified new business venture in consideration for a future equity
				interest that matures or converts to equity within three years after the
				investment. If the agreement governing investment does not provide for
				mandatory and unconditional conversion within three years after the investment,
				the investment will not be considered a contingent equity investment.
				Contingent equity investments that have features of a debt instrument may be
				ineligible for a tax credit if the agreement contains unreasonable risk
				mitigation provisions, as determined by the Department.
"Department" means the Illinois Department of Commerce
				and Economic Opportunity.
[
				35 ILCS
				5/220(a) ]
"Employee" means an individual who is employed for
				consideration for at least 35 hours each week or who renders any other standard
				of service generally accepted by industry custom or practice as full-time
				employment. Annually scheduled periods for inventory or repairs, vacations,
				holidays and paid time for sick leave, vacation or other leave is included in
				this computation of full-time employment. An individual for whom a W-2 is
				issued by a Professional Employer Organization (PEO) is a full-time employee if
				employed in the service of the applicant for consideration for at least 35
				hours each week or who renders to the applicant any other standard of service
				generally accepted by industry custom or practice as full-time employment. For
				example, an employee who works 25 hours per week meets the industry standard
				for full-time in the package delivery industry, and an employee who is employed
				for a least 35 hours per week during the historical seasonal production meets
				the industry standard for full-time in the candy manufacturing industry.
"Full-time equivalent job" means the number of hours worked by
				multiple employees to equal the number of hours worked by one full-time
				employee. For purposes of this definition, full-time employee means a person
				who works a minimum of 35 hours per week for a minimum of 13 consecutive weeks
				to be counted toward full-time equivalency.
"Investment" means
money (or its equivalent) given to a
				qualified new business venture
, at a risk of loss,
in
				consideration for an equity interest of the qualified new business
				venture.
[
				35 ILCS
				5/220(a) ] For the purposes of this
				definition, an investment is at risk of loss if its repayment depends entirely
				upon the success of the business operations of the qualified new business
				venture. A contingent equity investment is an investment.
"Liquidity event" means any event that would be
				considered an exit for an illiquid investment, including any event that allows
				the equity holders of the business (or any material portion of the business) to
				cash out some or all of their respective equity interests.
[
				35 ILCS
				5/220(i)(3) ]
"Minimum employment threshold" means:
at least 51% of the business' employee positions are in
				Illinois; and
at least 75% of the business' employee positions created
				following receipt of the investment are located in Illinois.
"Qualified new business venture" means a business that
				is registered with the Department under Section
				531.60.
[
				35 ILCS
				5/220(a) ]
"Qualifying liquidity event" means a liquidity event in which
				the claimant does not convey an equity interest to the qualified new business
				venture or a related member of the qualified new business venture.
"Related member" means a person that, with respect to
				the
term
"applicant", is any one of the
				following:
An individual, if the individual and the members of the
				individual's family (as defined in section 318 of the Internal Revenue
				Code
(
				26 USC
				318 )
) own directly, indirectly,
				beneficially, or constructively, in the aggregate, at least 50% of the value of
				the outstanding profits, capital, stock, or other ownership interest in
				the
recipient of the applicant's investment.
A partnership, estate or trust and any partner or
				beneficiary, if the partnership, estate or trust and its partners or
				beneficiaries own directly, indirectly, beneficially, or constructively, in the
				aggregate, at least 50% of the profits, capital, stock or other ownership
				interest in the
recipient of the applicant's investment.
A corporation and any party related to the corporation
				in a manner that would require an attribution of stock from the corporation
				under the attribution rules of section 318 of the Internal Revenue
				Code
(
				26 USC
				318 ),
if the applicant and any other
				related member own, in the aggregate, directly, indirectly, beneficially, or
				constructively, at least 50% of the value of the outstanding stock
of
				the recipient of the applicant's investment.
A corporation and any party related to that corporation
				in a manner that would require an attribution of stock from the corporation to
				the party or from the party to the corporation under the attribution rules of
				section 318 of the Internal Revenue Code if the corporation and all such
				related parties own, in the aggregate, at least 50% of the profits, capital,
				stock, or other ownership interest in the
recipient of the applicant's
				investment.
A person to or from whom there is attribution of
				ownership
of the stock of the recipient of the applicant's investment
in accordance with section 1563(e) of the Internal Revenue
				Code
(
				26 USC
				1563(e) ),
except
				that, for purposes of determining whether a person is a related member under
				this paragraph, "20%" shall be substituted for "5%" whenever "5%" appears in
				section 1563(e) of the Internal Revenue Code.
[
				35 ILCS
				5/220(a) ]
"Unreasonable risk mitigation provisions" means investment
				terms that remove a significant degree of the risk of loss, as determined by
				the Department, during the three years following the investment. Examples of
				these provisions include provisions for interest payments, security, and
				priority in the event of liquidation.