Governor John Kasich recently signed Executive Order 2011-28K, adopting provisions of the Ohio Administrative Code to implement a new tax incentive program commonly known as InvestOhio (the “Program”) enacted by the Ohio Legislature to stimulate new equity investment in Ohio small businesses. The Program permits certain taxpayers who invest up to $10 million in eligible Ohio small businesses to claim a 10 percent income tax credit at the end of the holding period provided the investment is held for the applicable holding period.
Administered by the Ohio Department of Development (the “Department”) in connection with the Ohio Tax Commissioner, the Program may award up to $100 million in tax credits during the state fiscal biennium that ends on June 30, 2013. The Program provides a non-refundable personal income tax credit to investors who invest new cash equity (which may be borrowed funds) into Ohio small businesses provided that the small business uses that investment for permitted expenditures within six months of receipt. In order to claim the credit, the investor must retain the equity investment for two years (the “Holding Period”), and the small business must likewise retain the assets that were acquired with the investment for the Holding Period.
Eligible investors include individuals, estates, trusts and pass-through entities (such as S corporations, partnerships and limited liability companies) in which persons subject to the Ohio personal income tax are beneficiaries, shareholders, partners or members. Shareholders of Ohio C corporations may also qualify for the credit under the Program if the shareholders have Ohio taxable income.
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