Ohio has enacted an Ohio income tax incentive for investing in certain approved Ohio small business entities where the investor makes the “qualifying investment,” holds the investment for the required holding period, and the approved investee small business entity makes a specified investment or expenditure that is at least as great as the investment made by the investor. The Invest Ohio program is to be administered by the Ohio Department of Development (ODOD) or its successor entity. Prior to making an investment, the investor should ensure that the investee entity is a “small business enterprise” that will be approved by ODOD or its successor entity and should understand the required holding period for such investment.

The administrative procedures of Invest Ohio are being developed now, but this Alert provides a road-map of how the program should work. While there are other details, the major elements are as follows...