Advanced Industries Investment Tax Credit

The Advanced Industries Investment Tax Credit encourages investments in Colorado advanced industries businesses by providing tax credits to investors. 

Investors can earn a state income tax credit for 25% of their investment up to $50,000 in credits on an investment of $200,000 or more. If the advanced industries business is in a Colorado enterprise zone, investors can earn a state income tax credit for 30% of their investment.

A business may have multiple investors. All investors can be eligible for the tax credit. An investor may apply for separate tax credits toward investments in different companies. Credits are awarded on a first-come, first-served basis, so an investor is not guaranteed to earn a tax credit when they make a qualified investment in a certified business.

If investors do not use all of their credits in a given tax year, they can carry forward the balance up to five years. These tax credits are not refundable, transferable, or sellable.

This program can award up to $750,000 in credits every year until December 31, 2022.

Eligible Advanced Industries Businesses            Remaining Funds Available     

Overview

Type: Tax credit

For: Investors and advanced industries businesses

Amount: 25% to 30% per investment up to $50,000

Application period: Rolling (until funds are gone)

OEDIT division: Business Funding and Incentives

Rates for tax credits vary depending on the property’s location. If the business receiving the investment operates in an enterprise zone, the tax credit to the investor is 30% of the qualified investment, up to the $50,000 maximum allowable tax credit amount per investment.

The business needs to get their Enterprise Zone Pre-Certification number to qualify for enterprise zone status. Businesses can become pre-certified for free by applying through the OEDIT application portal.

Location Rate Maximum allowable amount
Standard 25% $50,000
Enterprise zone 30% $50,000

For a business to be an investee for this tax credit, it needs to:

  • be a corporation, partnership, LLC, or other business entity (individuals do not qualify)
  • manufacture an advanced technology and influence one or more of Colorado’s advanced industries, which include advanced manufacturing, aerospace, bioscience, electronics, energy and natural resources, infrastructure engineering, and information technology
  • have headquarters in Colorado or have at least 50% of employees based in Colorado
  • be registered with the Colorado Secretary of State and in Good Standing
  • have received fewer than $10 million from third-party investors since the business was formed
  • have annual revenues of fewer than $5 million
  • have been actively operating and generating revenue for fewer than five years

If your business has less than 50% of its employees in Colorado, you will need to provide documentation on business letterhead, signed by the CEO or other officer with similar authority.

Such documentation must:

  • provide the titles and functions of all employees identifying where such positions are employed (Colorado or other state or country)
  • include the statement, “I attest that (Business Name) is headquartered in Colorado, and that (identify individuals) work in Colorado on behalf of the business and are responsible for executive orders and key policy decisions.”

To be eligible for this tax credit as an investor, you need to:

  • be an eligible entity type including individual, LLC, partnership, S-corp (C-corps are not eligible)
  • have a different federal employer identification number or taxpayer ID from the company accepting your investment
  • invest in common stock, preferred stock, interest in partnership, interest in LLC, equity security, or convertible debt instrument
  • invest at least $10,000
  • hold fewer than 30% voting power when combined with affiliates, immediately before investment and fewer than 50% voting power when combined with affiliates, immediately after investment
  • certify that the tax credit was an incentive for making the investment
  • apply for the credit within 90 days of date you invested
  • make sure all payments in tranches are within the 90 days and in the same calendar year

An affiliate is defined as any person or entity that controls, is controlled by, or is under common control with another person or entity. For individuals, affiliates include spouses, children, siblings, and parents.

Both the business and the investor need to apply separately for this program. Businesses can apply at any time.

We encourage businesses to apply for this program even if you do not have an investor lined up. If you find investors later, they will need your business’ certification number.

Follow these steps to apply for this program.

1. Complete the Investee Pre-certification on the OEDIT application portal.

  • Log in to your account or create a new account. To protect your personal information, we manually add new users to the portal, so it may take several days to activate your account.
  • Complete the Advanced Industries Tax Credit Investee Pre-certification to prove eligibility.

2. Complete the Investee Certification on the OEDIT application portal.

  • After you receive your pre-certification, complete the Advanced Industries Tax Credit Investee Certification. You will be asked to include these documents:
    • statement of Good Standing with the Colorado Secretary of State
    • proof of business organization including articles of incorporation, certificate of partnership
    • most recent year-end balance sheet
    • all year-end income statements or income tax filings from formation or the three most recent years
    • Investment worksheet (XLS)
    • capitalization table
    • investment term sheet
  • We will email you after we approve your certification.

3. Give your certification number to investors so they can claim the tax credit. Investors will use this certification number when they apply to receive the tax credit.

Both the business and the investor need to apply separately for this program. 

Follow these steps to apply for this program.

1. Complete the Advanced Industries Tax Credit Investor Eligibility Check on the OEDIT application portal.

  • Apply within 90 days of a qualified investment.
  • Log in to your account or create a new account. To protect your personal information, we manually add new users to the portal, so it may take several days to activate your account.
  • Complete the Advanced Industries Tax Credit Investor Eligibility Check to prove eligibility.
  • Review the Investor Pre-Qualification Guide for steps on how to apply in the application portal.

2. Complete the Advanced Industries Tax Credit Investor Application on the OEDIT application portal.

  • After you receive your eligibility check, complete the Advanced Industries Tax Credit Investor Application.
  • You will need to submit these documents in your application:
    • proof of funding in PDF format, such as a cancelled check, bank statement, and/or a screenshot of bank account activity. These documents should show the investor’s contact name, the business you invested in, and the date you sent funds to the business
    • the most recent capitalization table with investors’ names, investment amount, dates of investments, and percentage of voting power
    • term sheet for the funding round with dates of investments
    • business’s certification number (APP-######) provided by the business
  • We will email you after we approve your application.

3. File Colorado income taxes and include certification documents.

Program Manager

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