A BILL

To amend the Internal Revenue Code of 1986 to allow a

credit against income tax for qualified investments in
certain small businesses.

1 Be it enacted by the Senate and House of Representatives

2 of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the Invest In America Act of

5 2017.

6 SECTION 2. ANGEL INVESTMENT TAX CREDIT.

7 (A) IN GENERAL. Subpart D of part IV of subchapter

8 A of chapter 1 of the Internal Revenue Code of 1986 is

9 amended by adding at the end the following new section:

10 SEC. 30E. ANGEL INVESTMENT TAX CREDIT.

11 (a) ALLOWANCE OF CREDIT. There shall be

12 allowed as a credit against the tax imposed by this chapter for a

13 given taxable year an amount equal to: (i) 50 percent of the

14 aggregate amount of qualified equity investments made by a

15 qualified investor during such taxable year in an offering of the

16 type described in subsection (c)(1)(C)(i) below; and (ii) 10

17 percent of the aggregate amount of qualified equity investments

18 made by a qualified investor during such taxable year in an

19 offering of the type described in subsection (c)(1)(C)(ii) below.

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(b) LIMITATION. The total amount of the credit
2
allowed under: (i) subsection (a)(i) for any taxpayer shall not
3
exceed $1,000,000 for any taxable year; and (ii) under
4
subsection (a)(ii) for any taxpayer shall not exceed $3,000,000
5
for any taxable year.
6
(c) QUALIFIED EQUITY INVESTMENT. For
7
purposes of this section
8
(1) IN GENERAL. The term qualified equity
9
investment means any equity investment in a qualified
10
small business entity if
11
(A) such investment is prominently
12
designated for purposes of this section by the
13
qualified small business entity,
14
(B) such investment is acquired by the
15
taxpayer at its original issue solely in exchange for
16
money, and
17
(C) the offering transaction of the
18
qualified small business entity giving rise to the
19
qualified equity investment:
20
(i) is an offering:
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(I) where the available
22
investment interests have been
23
publically offered for sale;
24
(II) where at least twenty-five
25
percent (25%) of the aggregate

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amount of equity investments being
2
sold have been offered, and reserved
3
for sale, to non-accredited investors
4
(whether or not the same are
5
resultantly sold to such investors);
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(III) which is held open for sale
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a period of at least five (5)
8
consecutive months (or until fully
9
funded, if sooner); and
10
(IV) which is conducted
11
pursuant to, and in full compliance
12
with, all applicable laws and
13
regulations (including Section 3(a)
14
(11) or 4(a)(6) of the Securities Act of
15
1933 (15 U.S.C. 77c(a)(11)), Rule
16
147 (17 CFR 230.147) or Rule 147A
17
(17 CFR 230.147A) adopted under
18
the Securities Act of 1933, and/or any
19
other then available federal
20
exemption, as applicable); or
21
(ii) is an offering:
22
(I) which is made in
23
conjunction with, within one (1)
24
month from the commencement of,
25
and as part of a single plan of

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financing which includes, an offering
2
of the type described in subsection (i)
3
above;
4
(II) where the aggregate
5
amount of equity investments being
6
sold as part of such offering does not
7
exceed ten times the aggregate
8
amount of equity investments being
9
sold in the related offering of the type
10
described in subsection (i) above;
11
(III) where the rights with
12
respect to distributions and payments
13
of the available investment interests
14
being sold are equal, or junior, in
15
terms of priority to the respective
16
rights of the investment interests
17
being sold in the related offering of
18
the type described in subsection (i)
19
above;
20
(IV) where any rights of
21
investors in the available investment
22
interests being sold to subsequently
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receive, or otherwise have access to,
24
annual and interim financial
25
statements and other information of

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the qualified small business entity are
2
materially similar to the respective
3
rights of investors in the investment
4
interests being sold in the related
5
offering of the type described in
6
subsection (i); and
7
(V) which is conducted
8
pursuant to, and in full compliance
9
with, all applicable laws and
10
regulations (including the Securities
11
Act of 1933 (15 U.S.C. 77c(a)(11)),
12
Rule 505 (17 CFR 230.505) or Rule
13
506 (17 CFR 230.506) adopted under
14
the Securities Act of 1933, and/or any
15
other then available federal
16
exemption, as applicable).
17
(2) EQUITY INVESTMENT. The term equity
18
investment means any transaction or series of
19
transactions in which the taxpayer contributes money to
20
the qualified small business entity in exchange for
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(A) an equity interest in the qualified small
22
business entity (without regard to the class,
23
seniority position, or distribution/dividend, voting
24
or other rights, of such equity interest), including
25
stock in a corporation (other than nonqualified

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preferred stock as defined in section 351(g)(2)),
2
general or limited partnership interests,
3
membership interests, or other capital securities of
4
such qualified small business entity,
5
(B) any agreement for the future receipt of
6
equity interests of the type described in subsection
7
(A) above upon the occurrence of a defined future
8
event or events (including any agreement for
9
future equity or convertible debt issued by the
10
qualified small business entity) so long as such
11
agreement provides for a definitive method
12
(including calculation, timing and amounts) for
13
converting the value of the same into equity
14
interests of the type described in subsection (A),
15
(C) any agreement for the future receipt of a
16
portion of the revenues of the qualified small
17
business entity (including any revenue share
18
agreement) so long as such agreement provides for
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a definitive method (including calculation, timing
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and amounts), for determining the portion of such
21
revenues to be paid to investor and when such
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amounts are to be paid;
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(D) any combination of equity interests of
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the type described in subsection (A) through (C)
25
above.

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(d) QUALIFIED SMALL BUSINESS ENTITY. For
2
purposes of this section
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(1) IN GENERAL. The term qualified small
4
business entity means any domestic corporation or
5
partnership if such corporation or partnership, as of the
6
date of the qualified equity investment
7
(A) has (assuming the full sale of the
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subject qualified equity investments and taking
9
into account the stated uses of the offering
10
proceeds) demonstrated the potential for increasing
11
jobs within the United States, increasing capital
12
investment or expenditure within the United
13
States, or both,
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(B) has its principal place of business in the
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United States,
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(C) has fewer than 100 full-time (or
17
equivalent) employees, at least 75% of which are
18
residents of the United States,
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(D) has not received (and, taking into
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account the full sale of the subject qualified equity
21
investments will not receive): (i) more than
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$40,000,000 in aggregate equity investments
23
(whether or not such equity investments were, in
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whole or in part, qualified equity investments); and
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(ii) more than $20,000,000 in qualified equity

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investments,
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(E) is not an investment company, as
3
defined in Section 3 of the Investment Company
4
Act of 1940 (15 U.S.C. 80a-3), as amended and in
5
effect,
6
(F) is not an entity formed solely or
7
primarily for the purpose of qualifying for, or
8
otherwise taking advantage of, the credits allowed
9
under this section 30E;
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(G) is not principally engaged in real estate
11
development (except for development projects
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anticipated to take more than 3 consecutive years
13
to complete), insurance, banking, lending,
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lobbying, political consulting, or construction,
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(except for construction projects anticipated to take
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more than 3 consecutive years to complete and/or
17
with respect to the construction of power
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production plants that derive energy from a
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renewable energy resource),
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(H) has been approved as a qualified small
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business entity by the Secretary; and
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(I) has qualified equity investments
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designated for purposes of this paragraph.
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(2) DESIGNATION OF EQUITY INVEST
25
MENTS. For purposes of paragraph (1)(G) above, an

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equity investment shall not be treated as designated if,
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and to the extent, the aggregate amount of such equity
3
investments offered for sale exceeds the aggregate
4
amount of allowable credits allocated to the subject
5
qualified small business entity under this section 30E(d)
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(2),
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(e) QUALIFIED INVESTOR. For purposes of this
8
section
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(1) IN GENERAL. The term qualified
10
investor means any person or entity (including any
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investment fund) other than the qualified small business
12
entity itself and any person owning, directly, indirectly or
13
constructively (by application of Section 318), 15% or
14
more of the outstanding equity interests of the qualified
15
small business entity.
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(2) ALLOCATION OF CREDIT. To the extent
17
a qualified investor is entitled to credit under subsection
18
(a) and is subject to Subchapter K (relating to
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partnerships) or Subchapter S (relating to certain small
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business corporations), such credit shall be allocated to
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the equity holders of such entity in proportion to their
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respective ownership interest in the items of income,
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gain, loss, deduction or credit of such entity (or as
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otherwise specified in such entitys organizational
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documents), except that tax-exempt equity holders of the

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qualified investor shall be allowed to transfer their
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allocable portion of the credit permitted by this section to
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one or more other equity holders of the same qualified
4
investor (other than persons related to such qualified
5
investor within the meaning of paragraph (2)) in an
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exchange in which gain is recognized under section 1001.
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(f) NATIONAL LIMITATION ON AMOUNT OF
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INVESTMENTS DESIGNATED.
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(1) IN GENERAL. There is an angel
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investment tax credit limitation of $500,000,000 for each
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of taxable years 2017 through 2027.
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(2) ALLOCATION OF LIMITATION. The
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limitation under paragraph (1) shall be allocated by the
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Secretary among qualified small business entities
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selected by the Secretary.
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(3) CARRYOVER OF UNUSED LIMITATION.
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If the angel investment tax credit limitation for any
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calendar year exceeds the aggregate amount allocated
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under paragraph (2) for such year, such limitation for the
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succeeding calendar year shall be increased by the
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amount of such excess. No amount may be carried under
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the preceding sentence to any taxable year beginning on
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or after January 1, 2028.
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(g) APPLICATION WITH OTHER CREDITS.
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(1) BUSINESS CREDIT TREATED AS PART

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OF GENERAL BUSINESS CREDIT. Except as
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provided in paragraph (2), the credit which would be
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allowed under subsection (a) for any taxable year
4
(determined without regard to this subsection) shall be
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treated as a credit listed in section 38(b) for such taxable
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year (and not allowed under subsection (a)).
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(2) PERSONAL CREDIT.
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(A) IN GENERAL. In the case of an
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individual who elects the application of this
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paragraph, for purposes of this title, the credit
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allowed under subsection (a) for any taxable year
12
(determined after application of paragraph (1))
13
shall be treated as a credit allowable under subpart
14
A for such taxable year.
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(B) LIMITATION BASED ON AMOUNT
16
OF TAX.Where an individual elects to apply the
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benefit of this section in any taxable year, the
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credit permitted to be taken by such individual
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may not exceed the amount permitted as a credit
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against tax under section 26(a) for such taxable
21
year.
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(C) PERSONAL CREDIT CARRYBACKS
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AND CARRYOVERS.
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(i) Any amount by which the credit
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allowable under subsection (a) by reason of

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subparagraph (A) exceeds the limitation imposed
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by subparagraph (B) for any taxable year, such
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excess shall be:
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(I) a personal credit carryback to
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each of the 2 taxable years preceding the
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unused credit year, and
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(II) a personal credit carryforward to
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each of the 20 taxable years following the
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unused credit year.
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(ii) The entire amount of the personal credit
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for any taxable year shall be carried to the earliest
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of the taxable years to which (by reason of
13
paragraph (i)) such loss may be carried. The
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portion of such credit which shall carried to each
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of the other taxable years shall be the excess, if
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any, of the amount of such credit over the
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limitation set forth under paragraph (g)(2)(B) of
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this section applicable to such taxable year.
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(h) SPECIAL RULES.
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(1) BASIS. For purposes of this subtitle, the
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basis of any investment with respect to which a credit is
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allowable under this section shall be reduced by the
23
amount of such credit so allowed. This subsection shall
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not apply for purposes of sections 1202, 1397B, and
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1400B.

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(2) RECAPTURE. The Secretary shall, by
2
regulations, provide for recapturing the benefit of any
3
credit allowable under subsection (a) with respect to any
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qualified equity investment which is held by the taxpayer
5
less than 3 years, except that no benefit shall be
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recaptured in the case of
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(A) transfer of such investment by reason
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of the death of the taxpayer,
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(B) transfer between spouses,
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(C) transfer incident to the divorce (as
11
defined in section 1041) of such taxpayer, or
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(D) a transaction to which section 381(a)
13
applies (relating to certain acquisitions of the
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assets of one corporation by another corporation).
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(i) REGULATIONS. The Secretary shall prescribe
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such regulations as may be appropriate to carry out this section,
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including regulations
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(1) which prevent the abuse of the purposes of
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this section,
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(2) which impose appropriate reporting
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requirements, and
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(3) which apply the provisions of this section to
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newly formed entities.
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(B) CREDIT MADE PART OF GENERAL BUSINESS
2
CREDIT. Subsection (b) of section 38 of the Internal
3
Revenue Code of 1986 is amended
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(1) in paragraph (35), by striking plus;
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(2) in paragraph (36), by striking the period at the
6
end and inserting , plus; and
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(3) by adding at the end the following new
8
paragraph:
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(37) the portion of the angel investment tax credit
10
to which section 30E(g)(1) applies..
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(C) CONFORMING AMENDMENTS.
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(1) Section 1016(a) of the Internal Revenue Code
13
of 1986 is amended by striking and at the end of
14
paragraph (36), by striking the period at the end of
15
paragraph (37) and inserting , and, and by inserting
16
after paragraph (37) the following new paragraph:
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(38) to the extent provided in section 30E(g)(1)..
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(2) Section 24(b)(3)(B) of such Code is amended
19
by striking and 30D and inserting 30D, and 30E.
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(3) Section 25(e)(1)(C)(ii) of such Code is
21
amended by inserting 30E, after 30D,.
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(4) Section 25A(i)(5)(B) of such Code is amended
23
by striking and 30D and inserting , 30D, and 30E.
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(5) Section 25A(i)(5) of such Code is amended by
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inserting 30E, after 30D,.

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(6) Section 25B(g)(2) of such Code is amended by
2
striking and 30D and inserting 30D, and 30E.
3
(7) Section 26(a)(1) of such Code is amended by
4
striking and 30D and inserting 30D, and 30E.
5
(8) Section 30(c)(2)(B)(ii) of such Code is
6
amended by striking and 30D and inserting , 30D, and
7
30E.
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(9) Section 30B(g)(2)(B)(ii) of such Code is
9
amended by striking and 30D and inserting 30D, and
10
30E.
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(10) Section 30D(c)(2)(B)(ii) of such Code is
12
amended by striking and 25D and inserting , 25D, and
13
30E.
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(11) Section 904(i) of such Code is amended by
15
striking and 30D and inserting 30D, and 30E.
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(12) Section 1400C(d)(2) of such Code is amended
17
by striking and 30D and inserting 30D, and 30E.
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(D) CLERICAL AMENDMENT. The table of sections
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for subpart B of part IV of subchapter A of chapter 1 of the
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Internal Revenue Code of 1986 is amended by adding at the end
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the following new item:
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Sec. 30E. Angel investment tax credit..
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(E) REGULATIONS ON ALLOCATION. Not later
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than 120 days after the date of the enactment of this Act, the
25
Secretary of the Treasury or the Secretarys delegate shall

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prescribe regulations which specify
2
(1) how small business entities shall apply for an
3
allocation of tax credits under section 30E(d)(2) of the
4
Internal Revenue Code of 1986, as added by this section,
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(2) the competitive procedure through which such
6
allocations are made,
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(3) the criteria for determining an allocation to a
8
small business entity, including
9
(A) the criteria to be utilized in determining
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a small business entitys satisfaction of the criteria
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in section 30E(d)(1)(A),
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(B) whether the small business entity has
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received an angel investment tax credit, or its
14
equivalent, from the State in which the small
15
business entity is located and registered, and
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(C) whether the small business entity has
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been awarded a Small Business Innovative
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Research or Small Business Technology Transfer
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grant from a Federal agency,
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(4) the actions that such Secretary or delegate shall
21
take to ensure that such allocations are properly made to
22
qualified small business entities, and
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(5) the actions that such Secretary or delegate shall
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take to ensure that angel investment tax credits are
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allocated and issued to the taxpayer.

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(F) AUDIT AND REPORT. Not later than January 31,
2
2022, the Comptroller General of the United States, pursuant to
3
an audit of the angel investment tax credit program established
4
under section 30E of the Internal Revenue Code of 1986 (as
5
added by subsection (a)), shall report to Congress on such
6
program, including all qualified small business entities that
7
receive an allocation of an angel investment credit under such
8
section.
9
SECTION 3. ANGEL INVESTMENT LOSS
10
DEDUCTION.
11
(A) IN GENERAL. Section 165 of Subpart A of part
12
VI of subchapter B of chapter 1 of the Internal Revenue Code
13
of 1986 is amended by adding the following as new subsection
14
(g)(4) thereof:
15
(4) Qualifying Angel Investments. If any security which
16
was acquired as part of an offering of the type described in
17
section 30E(c)(1)(C)(i) becomes worthless during the three year
18
period immediately following the date of acquisition of such
19
security, the resulting loss therefrom (after taking into account
20
the aggregate amount of all credits previously claimed by the
21
subject taxpayer under section 30E, if any) shall be treated as an
22
ordinary loss described in subsection (c)(2) incurred during the
23
taxable year in which such loss occurs.
24
(B) CONFORMING AMENDMENT. Section 165(g)
25
of the Internal Revenue Code of 1986 is amended by striking

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If at the beginning of paragraph (1) and inserting Except as
2
provided in paragraph (4), if.
3
SECTION 4. EFFECTIVE DATE. The amendments made
4
by this Act shall apply to investments made after December 31,
5
2016, in taxable years ending after such date.
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