Compilation of Rules and Regulations of the State of Georgia › Department 560 - RULES OF DEPARTMENT OF REVENUE › Chapter 560-7 - INCOME TAX DIVISION › Subject 560-7-8 - RETURNS AND COLLECTIONS › Rule 560-7-8-.52 - Qualified Investor Tax Credit

Current through Rules and Regulations filed through June 27, 2024
(1)
Purpose.
This regulation
				provides guidance concerning the implementation and administration of the tax
				credit under O.C.G.A. §
									48-7-40.30.
(2)
Definitions.
As used in this
				regulation:
(a) Headquarters. The term
				"headquarters" means the principal central administrative office of a business
				located in this state which conducts significant operations of such
				business.
(b) Pass-Through Entity.
				The term "pass-through entity" means a partnership, an S-corporation, or a
				limited liability company taxed as a partnership.
(c) Professional Services. The term
				"professional services" means those services specified in paragraph (2) of
				O.C.G.A. §
										14-7-2 or 
				any service which requires as a condition precedent to the rendering of such
				service the obtaining of a license from a state licensing board under Title 43
				of the O.C.G.A.
(d) Qualified
				Business. The term "qualified business" means a business that:
1. Is either a corporation, limited liability
				company, or a general or limited partnership located in this state;
2. Was organized no more than three years
				before the qualified investment was made;
3. Has its headquarters located in this state
				at the time the investment was made and has maintained such headquarters for
				the entire time the qualified business benefited from the tax credit under
				O.C.G.A. §
											48-7-40.30.
4. Employs 20 or fewer people in this state
				at the time it is registered as a qualified business;
5. Has had in any complete fiscal year before
				registration gross annual revenue as determined in accordance with the Internal
				Revenue Code of $500,000.00 or less on a consolidated basis;
6. Has not obtained during its existence more
				than $1 million in aggregate gross cash proceeds from the issuance of its
				equity or debt investments, not including commercial loans from chartered
				banking or savings and loan institutions;
7. Has not utilized the tax credit under
				O.C.G.A. §
											48-7-40.26;
8. Is primarily engaged in manufacturing,
				processing, online and digital warehousing, online and digital wholesaling,
				software development, information technology services, or research and
				development or is a business providing services other than those described in
				subparagraph (2)(d)9. of this regulation; and
9. Does not substantially engage in any of
				the following:
(i) Retail sales;
(ii) Real estate or construction;
(iii) Professional services;
(iv) Gambling;
(v) Natural resource extraction;
(vi) Financial, brokerage, or investment
				activities or insurance; or
(vii)
				Entertainment, amusement, recreation, or athletic or fitness activity for which
				an admission or membership is charged.
(viii) A business shall be substantially
				engaged in one of the above activities if its gross revenue from such activity
				exceeds 25 percent of its gross revenues in any fiscal year or it is
				established pursuant to its articles of incorporation, articles of
				organization, operating agreement or similar organizational documents to engage
				in such activity as one of its primary purposes.
(e) Qualified Investment. The term "qualified
				investment" means an investment by a qualified investor of cash in a qualified
				business for common or preferred stock or an equity interest or a purchase for
				cash of qualified subordinated debt in a qualified business; provided, however,
				that funds constituting a qualified investment cannot have been raised or be
				raised as a result of other tax incentive programs. Furthermore, no investment
				of common or preferred stock or an equity interest or purchase of subordinated
				debt shall qualify as a qualified investment if a broker fee or commission or a
				similar remuneration is paid or given directly or indirectly for soliciting
				such investment or purchase.
(f)
				Qualified Investor. The term "qualified investor" means an accredited investor
				as that term is defined by the United States Securities and Exchange Commission
				who is:
1. An individual person who is a
				resident of this state or a nonresident who is obligated to pay taxes imposed
				by O.C.G.A. §
											48-7-20;
				or
2. A pass-through entity, owned
				by individual persons, which is formed for investment purposes, has no business
				operations, has committed capital under management of equal to or less than $5
				million, and is not capitalized with funds raised or pooled through private
				placement memoranda directed to institutional investors. A venture capital fund
				or commodity fund with institutional investors or a hedge fund shall not
				qualify as a qualified investor.
(g) Qualified Subordinated Debt. The term
				"qualified subordinated debt" means indebtedness that is not secured, that may
				or may not be convertible into common or preferred stock or other equity
				interest, and that is subordinated in payment to all other indebtedness of the
				qualified business issued or to be issued for money borrowed and no part of
				which has a maturity date less than five years after the date such indebtedness
				was purchased.