Angel Investor FAQ
- Q. How do I qualify for the Kansas Angel Investor Tax Credit?
- A. You must be an accredited investor who is a natural person or an individual owner of a permitted entity investor, who is of high net worth, as defined in 17 C.F.R. 230.501(a) as in effect on the effective date of this Act. For the purposes of this act, a person who serves as an executive, officer, employee, vendor or independent contractor of the business in which an otherwise qualified cash investment is made is not an angel investor and such person shall not qualify for the issuance of tax credits for such investment.
- Q. How many tax credit certificates can I qualify for?
- A. Each investor can receive a credit equal to the lesser of $50,000 or 50 percent of an Angel Investor’s Qualified Cash Investment in a single business. Additionally, for each tax year, an Angel Investor shall be eligible to receive tax credits up to $250,000.
- Q. Can I sell my tax credits?
- A. Each investor who has not owed income tax for the immediate past three taxable years under the provisions of article 32, chapter 79 of the Kansas Statutes Annotated and who does not believe that it will owe any such tax for the current taxable year may sell their tax credit.
- How do I obtain a tax clearance certificate?
A. Go to the Kansas department of Revenue page for a tax clearance request found here:
Fill the form out in it’s entirety.
Reason for Tax Clearance Request: Other – Explain KAITC transfer request
Requestor’s Name: This is your name
Relationship to Authority: Self
- Q. Who can I sell my tax credit to?
- A. Investors can sell the tax credit to any natural person who is an accredited investor as defined in 17 C.F.R. 230.501(a) as in effect on the date of this act. For more information on how to handle this transaction, you should visit the credit transfer portion of this website .
- Q. How much can I sell my tax credit for?
- A. The credit transferred may be sold at a value agreed upon by both parties.
- Q. How often can a tax credit be transferred?
- A. Tax credits can only be transferred once and in the full amount of each tax credit certificate.
- Q. How long is a tax credit eligible for transfer?
- A. The transferee must claim a tax credit in the tax year that the original investment was made. If that original investment date is beyond the three-year statute of limitations, a refund cannot be given for any tax years closed by the statute of limitations.
- Q. Can I invest in any company to get the tax credit?
- A. No, you can only invest in a Qualified Kansas Business as designated by Commerce and listed on the web site. Your investment must take place after the company has been designated as a qualified company. Tax credits are no retroactive for investment prior to designation.
- Q. Am I guaranteed a tax credit after I register?
- A. Registered Angels are not guaranteed a tax credit. Tax credits are issued upon an investment into a Kansas Qualified company and are subject to the annual allocation cap. Tax credits are issued first come first serve.
- Q. Can I receive a tax credit if I invest in a qualified company through a flow-through entity?
- A. Possibly, you can receive tax credits for an investment made by a flow-through entity (permitted entity investor). The owners receiving tax credits must be accredited investors, natural persons, and must be claimed in proportion to their ownership share in the flow-through entity. If any owner of the entity is not a qualified investor or is another entity, the flow through entity will not be considered a permitted entity.
- Q. Can I receive a tax credit for investments made through a trust?
- A. An investor may receive tax credits for investments made through a Revocable Trust that is in the individual investors name. If owned by more than one individual all owners must be qualified investors. Irrevocable trusts are ineligible for tax credits.
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