New Jersey Administrative Code › Title 19 - OTHER AGENCIES › NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY › Chapter 31R - ANGEL INVESTOR TAX CREDIT PROGRAM › Subchapter 1 - ANGEL INVESTOR TAX CREDIT PROGRAM › Section 19:31R-1.2 - Definitions

Current through Register Vol. 56, No. 14, July 15, 2024
The following words and terms, as used in this subchapter,
					 shall have the following meanings, unless the context clearly indicates
					 otherwise.
"Act" means the New Jersey Angel Investor Tax Credit Act,
					 P.L.
					 2013, c. 14, as
					 amended.
"Advanced computing" means a technology used in the
					 designing and developing of computing hardware and software, including
					 innovations in designing the full spectrum of hardware from hand-held
					 calculators to super computers, and peripheral equipment.
"Advanced materials" means materials with engineered
					 properties created through the development of specialized processing and
					 synthesis technology, including ceramics, high value-added metals, electronic
					 materials, composites, polymers, and biomaterials.
"Acquiring person" means the constituent corporation the
					 stockholders of which own the largest proportion of the total voting power in
					 the surviving or consolidated corporation after the merger or
					 consolidation.
"Authority" means the New Jersey Economic Development
					 Authority.
"Biotechnology" means the continually expanding body of
					 fundamental knowledge about the functioning of biological systems from the
					 macro level to the molecular and sub-atomic levels, as well as novel products,
					 services, technologies, and sub-technologies developed as a result of insights
					 gained from research advances that add to that body of fundamental
					 knowledge.
"Board" means the Board of the New Jersey Economic
					 Development Authority.
"Carbon footprint reduction technology" means a technology
					 using equipment for the commercial, institutional, and industrial sectors that
					 increases energy efficiency, develops and delivers renewable or
					 non-carbon-emitting energy technologies, develops innovative carbon emissions
					 abatement with significant carbon emissions reduction potential, or promotes
					 measurable electricity end-use energy efficiency.
"Commitment agreement" means the contract between the
					 qualified venture fund, the investor, and the Authority pursuant to N.J.A.C.
					 19:31R-1.7(d)2.
"Control" with respect to a corporation means ownership,
					 directly or indirectly, of stock possessing 80 percent or more of the total
					 combined voting power of all classes of the stock of the corporation entitled
					 to vote; and "control" with respect to a trust means ownership, directly or
					 indirectly, of 80 percent or more of the beneficial interest in the principal
					 or income of the trust. The ownership of stock in a corporation, of a capital
					 or profits interest in a partnership or association or of a beneficial interest
					 in a trust shall be determined in accordance with the rules for constructive
					 ownership of stock provided in subsection (c) of section 267 of the Federal
					 Internal Revenue Code of 1986 (26 U.S.C. § 267), other than paragraph (3)
					 of subsection (c) of that section.
"Controlled group" means one or more chains of corporations
					 connected through stock ownership with a common parent corporation, if stock
					 possessing at least 80 percent of the voting power of all classes of stock of
					 each of the corporations is owned directly or indirectly by one or more of the
					 corporations and the common parent owns, directly, stock possessing at least 80
					 percent of the voting power of all classes of stock of at least one of the
					 other corporations.
"Director" means the Director of the Division of Taxation
					 in the Department of the Treasury.
"Diverse entrepreneur" means a New Jersey-based business
					 that meets the criteria for a minority-owned business or women-owned business
					 as set forth at section 3 of P.L. 1983, c. 482 (N.J.S.A.
					 52:32-19), as evidenced by a certification by
					 the State as a minority-owned business or a women-owned business pursuant to
					 P.L. 1986, c. 195 (N.J.S.A. 52:27H-21.17 et
					 seq.).
"Electronic device technology" means a technology involving
					 microelectronics, semiconductors, electronic equipment and instrumentation,
					 radio frequency, microwave and millimeter electronics, and optical and
					 optic-electrical devices, or data and digital communications and imaging
					 devices.
"Eligible technology" means advanced computing, advanced
					 materials, biotechnology, carbon footprint reduction technology, electronic
					 device technology, information technology, life sciences, medical device
					 technology, mobile communications technology, or renewable energy
					 technology.
"Filling a position in New Jersey" means filling a position
					 with a full-time employee whose primary office is in New Jersey and who spends
					 at least 80 percent of his or her time in New Jersey, or who spends any other
					 period of time generally accepted by custom or practice as full-time employment
					 in New Jersey, as determined by the Authority.
"Full-time employee" means a person who is:
1. Employed by a New Jersey emerging technology business on
					 a permanent or indefinite basis for consideration for at least 35 hours a week,
					 or who renders any other standard of service generally accepted by custom or
					 practice, as determined by the Authority, as full-time employment, including a
					 common law employee, which shall mean a person who is in an employer-employee
					 relationship with the business in which the business has the right to direct
					 and control how the person performs the services; and whose wages are subject
					 to withholding as provided in the New Jersey Gross Income Tax Act,
					 N.J.S.A.
					 54A:1-1 et seq., or are not subject to the
					 New Jersey Gross Income Tax Act,
					 N.J.S.A.
					 54A:1-1 et seq., by virtue of a reciprocity
					 agreement between New Jersey and the state in which the employee
					 resides;
2. A partner of a New Jersey emerging technology business
					 and works for the partnership for at least 35 hours a week, or who renders any
					 other standard of service generally accepted by custom or practice, as
					 determined by the Authority, as full-time employment, and whose distributive
					 share of income, gain, loss, or deduction, or whose guaranteed payments, or any
					 combination thereof, is subject to the payment of estimated taxes, as provided
					 in the New Jersey Gross Income Tax Act,
					 N.J.S.A.
					 54A:1-1 et seq., or are not subject to the
					 New Jersey Gross Income Tax Act, N.J.S.A. 54:A1-1 et seq., by virtue of a
					 reciprocity agreement between New Jersey and the state in which the employee
					 resides;
3. An employee who is employed under a formal written
					 agreement with an institution of higher education whereby the institution's
					 students are employed by the New Jersey emerging technology business on a
					 permanent basis within a single position and that position requires at least 35
					 hours a week, or any other standard of service generally accepted by custom or
					 practice, as determined by the Authority. Full-time employee shall not include
					 any person who works as an independent contractor or on a consulting basis for
					 the New Jersey emerging technology business; or any person who works as an
					 intern, as a temporary employee, or in a temporary position.
"Full-time employee" shall not include any person who works
					 as an independent contractor or on a consulting basis for the New Jersey
					 emerging technology business; or any person who works as an intern, as a
					 temporary employee, or in a temporary position.
"Information technology" means software publishing, motion
					 picture and video production, television production and post-production
					 services, telecommunications, data processing, hosting and related services,
					 custom computer programming services, computer system design, computer
					 facilities management services, other computer-related services, and computer
					 training.
"Investor" means the individual or entity that made the
					 qualified investment.
"License" means an agreement that states therein that the
					 emerging technology business is granting a license that authorizes the investor
					 to control aspects of the development of the New Jersey emerging technology
					 business's protected proprietary intellectual property. License shall not
					 include an agreement, such as an exclusive distribution agreement or similar
					 business arrangement that is not registered with the U.S. Federal Government,
					 such as the U.S. Patent and Trademark Office, and which does not grant the
					 investor control of the protected proprietary intellectual property.
"Life sciences" means the production of medical equipment,
					 ophthalmic goods, medical or dental instruments, diagnostic substances,
					 biopharmaceutical products, or physical or biological research.
"Marketing rights" means the exclusive right of an entity
					 to sell a product or products that qualifies the originator of that product(s)
					 as a New Jersey emerging technology business.
"Medical device technology" means a technology involving
					 any medical equipment or product (other than a pharmaceutical product) that has
					 therapeutic value, diagnostic value, or both, and is regulated by the Federal
					 Food and Drug Administration.
"Mobile communications technology" means a technology
					 involving the functionality and reliability of the transmission of voice and
					 multimedia data using a communication infrastructure via a computer or a mobile
					 device, that shall include, but not be limited to, smartphones, electronic
					 books and tablets, digital audio players, motor vehicle electronics, home
					 entertainment systems, and other wireless appliances, without having to be
					 connected to any physical or fixed link.
"New Jersey-based business" means a company with fewer than
					 225 employees, of whom at least 75 percent are filling a position in New
					 Jersey, that is doing business, employing, or owning capital or property, or
					 maintaining an office in this State.
"New Jersey emerging technology business holding company"
					 means any corporation, association, firm, partnership, trust, or other form of
					 business organization, but not a natural person, which directly or indirectly,
					 owns, has the power or right to control, or has the power to vote, a
					 controlling share of the outstanding voting securities of a corporation or
					 other form of a New Jersey emerging technology business.
"New Jersey emerging technology business" or "emerging
					 technology business" means a company with fewer than 225 employees, of whom at
					 least 75 percent are filling a position in New Jersey, that is doing business,
					 employing or owning capital or property, or maintaining an office in this
					 State, whose primary business is an eligible technology, and:
1. Has qualified research expenses paid or incurred for
					 research conducted in its most recent fiscal year prior to the qualified
					 investment in this State;
2. Conducts pilot scale manufacturing in this State;
					 or
3. Conducts technology commercialization in this
					 State.
In calculating the number of employees under this
					 definition, employees of any company, except the investor, with control over
					 the New Jersey emerging technology business or in the same controlled group as
					 the New Jersey emerging technology business, shall be included. The company
					 must continue to operate as a New Jersey emerging technology business until the
					 earlier of six months after the qualified investment or the date of the
					 investor's completed application for the credit pursuant to N.J.A.C.
					 19:31R-1.4.
"New Jersey emerging technology business holding company"
					 means any corporation, association, firm, partnership, trust, or other form of
					 business organization, but not a natural person, which directly or indirectly,
					 owns, has the power or right to control, or has the power to vote, a
					 controlling share of the outstanding voting securities of a corporation or
					 other form of a New Jersey emerging technology business.
"Partnership" means a syndicate, group, pool, joint
					 venture, or other unincorporated organization through or by means of which any
					 business, financial operation, or venture is carried on, and which is not a
					 trust or estate, a corporation, or a sole proprietorship.
"Pilot scale manufacturing" means the design, construction,
					 and testing of preproduction prototypes and models in an eligible technology
					 other than for commercial sale, excluding sales of prototypes or sales for
					 market testing if the total gross receipts, as calculated in the manner
					 provided in section 6 of P.L. 1945, c. 162 (N.J.S.A.
					 54:10A-6), from the sales of the product,
					 service, or process do not exceed $ 1 million.
"Privilege period" means the calendar or fiscal accounting
					 period for which a tax is payable under the Corporation Business Tax Act,
					 section 5 of P.L. 1945, c. 162 (54:10A-5) or New Jersey Gross Income Tax Act,
					 54A:1-1 et seq.
"Production agreement" means, upon completion of pilot
					 scale manufacturing or technology commercialization, the first manufacturing
					 contract of a product that qualifies the producer of that product as a New
					 Jersey emerging technology business that causes the total gross receipts, as
					 calculated in the manner provided in section 6 of P.L. 1945, c. 162 (54:10A-6),
					 from such sales of the product, service, or process to be no less than $
					 1,000,000.
"Program" means the Angel Investor Tax Credit
					 Program.
"Protected proprietary intellectual property" means
					 intellectual property that is the technology of the entity's primary business
					 as a New Jersey emerging technology business that is also protected via a
					 patent pending, patent awaiting approval, approved patent, or registered
					 copyright.
"Purchase agreement" means, upon completion of pilot scale
					 manufacturing or technology commercialization, the first acquisition of the
					 product that qualifies the producer of that product as a New Jersey emerging
					 technology business that causes the total gross receipts, as calculated in the
					 manner provided in section 6 of P.L. 1945, c. 162 (54:10A-6), from such sales
					 of the product, service, or process to be no less than $ 1,000,000.
"Qualified investment" means the non-refundable transfer of
					 cash to a New Jersey emerging technology business or to a New Jersey emerging
					 technology business holding company by an investor that is not a related person
					 of the New Jersey emerging technology business or the New Jersey emerging
					 technology business holding company, at the time of the transfer of cash, the
					 transfer of which is in exchange for:
1. Stock, interests in partnerships or joint ventures,
					 licenses (exclusive or non-exclusive), right to use technology, marketing
					 rights, warrants, options, or any assets similar to those included in this
					 definition, including but not limited to, options or rights to acquire any of
					 the assets; or
2. A purchase, production, or research agreement between or
					 among the taxpayer and the New Jersey emerging technology business or the New
					 Jersey emerging technology business holding company or both.
For the transfer of cash to be considered non-refundable,
					 the assets received by the investor in the exchange referred to at paragraph 1
					 above and the agreements entered into by the investor referred to at paragraph
					 2 above must be held or not expire for at least two calendar years from the
					 date of the exchange, with the exception of initial public offerings (IPOs),
					 mergers and acquisitions, damage awards for the New Jersey emerging technology
					 business's default of an agreement, or other return of initial cash outlay
					 beyond the investor's control. "Qualified investment" also means the
					 irrevocable contractual commitment to a qualified venture fund.
"Qualified research expenses" means qualified research
					 expenses as defined in section 41 of the Federal Internal Revenue Code of 1986
					 (26 U.S.C. § 41), as in effect on June 30, 1992, in an eligible
					 technology.
"Related person" means:
1. A corporation, partnership, association, or trust
					 controlled by the taxpayer or the investor;
2. An officer, corporation, partnership, association or
					 trust that is in the control of the taxpayer or the investor;
3. A corporation, partnership, association, or trust
					 controlled by an individual, corporation, partnership, association, or trust
					 that is in the control of the taxpayer or the investor; or
4. A member of the same controlled group as the taxpayer or
					 the investor.
"Qualified venture fund" means a venture fund required by a
					 commitment agreement with an investor and the Authority to invest a minimum of
					 50 percent of the venture fund's committed funds in New Jersey-based businesses
					 and that the Authority, in its sole discretion, determines has the capacity to
					 make the minimum investment based upon the qualified venture fund's investment
					 history, if any, its private placement memorandum and other relevant
					 information.
"Renewable energy technology" means a technology involving
					 the generation of electricity from solar energy; wind energy; wave or tidal
					 action; geothermal energy; the combustion of gas from the anaerobic digestion
					 of food waste and/or sewage sludge at a biomass generating facility; the
					 combustion of methane gas captured from a landfill; and a fuel cell powered by
					 methanol, ethanol, landfill gas, digestor gas, biomass gas, or other renewable
					 fuel, but not powered by a fossil fuel.
"Research agreement" means a contract to methodically study
					 a component of the field that qualifies the entity conducting the methodical
					 study as a New Jersey emerging technology business.
"Right to use technology" means the exclusive right of an
					 entity to utilize a product or products that qualifies the originator of that
					 product(s) as a New Jersey emerging technology business.
"Tax credit approval year" means the taxpayer's taxable
					 year or privilege period in which the Authority approves the application for
					 tax credits.
"Tax credit vintage year" means the taxpayer's taxable year
					 or privilege period in which the investor made the qualified investment.
"Taxpayer" means the individual filing a tax return
					 pursuant to the New Jersey Gross Income Tax Act, 54A:1-1 et seq. or the entity
					 filing a tax return pursuant to the Corporation Business Tax, section 5 of P.L.
					 1945, c. 162 (54:10A-5) that is eligible to receive a tax credit under the
					 Program. The taxpayer must be the investor except when the qualified investment
					 is made by a partnership or an entity treated as a partnership for tax
					 purposes, in which case, for purposes of the Program, the partnership or entity
					 shall be considered the investor and each partner or member of the entity shall
					 be considered a taxpayer.
"Technology commercialization" means the design,
					 construction, testing, and production for sale of a product in an eligible
					 technology previously in research or pilot scale manufacturing.
"Venture fund" means a partnership, corporation, trust, or
					 limited liability company that invests cash in a business during the early or
					 expansion stages of a business in exchange for an equity stake in the business
					 in which the investment is made. "Venture fund" may include a venture capital
					 fund, a family office fund, or a corporate investor fund, provided that a
					 professional manager administers the venture fund.
"Verified transfer of funds" means a non-refundable
					 transfer of funds equal to 100 percent of the taxpayer's qualified investment
					 in the New Jersey emerging technology business holding company to a New Jersey
					 emerging technology business by the New Jersey emerging technology business
					 holding company that is accompanied by documentation, as required by the
					 Authority, which provides proof of a cash transaction originating with a
					 taxpayer and concluding with a New Jersey emerging technology business,
					 provided that the transactions from origin to destination occur within the same
					 tax year.