New Jersey § 54a:4-13

§ 54a:4-13.

a. (1) A taxpayer, upon approval of the taxpayer's application therefor by the New

Jersey Economic Development Authority, and in consultation with the director, shall

be allowed a credit against the tax otherwise due for the taxable year under the “New

Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. , in an amount equal to 20 percent of the qualified investment made by the taxpayer

in a New Jersey emerging technology business, in a New Jersey emerging technology business holding company that makes a verified

transfer of funds to a New Jersey emerging technology business , or in a qualified venture fund ; provided, however, a taxpayer may be allowed a tax credit in an amount equal to

25 percent of the qualified investment if the taxpayer satisfies one of the requirements

set forth in paragraph (2) of this subsection. The value of tax credits allowed to a taxpayer pursuant to this section shall not

exceed $500,000 for the taxable year for each qualified investment made by the taxpayer. (2) Subject to the limits established in paragraph (1) of this subsection, the New

Jersey Economic Development Authority, in consultation with the director, shall increase

the amount of a tax credit allowed pursuant to this section by five percent if the

taxpayer makes a qualified investment in a New Jersey emerging technology business, in a New Jersey emerging technology business holding company that makes a verified

transfer of funds to a New Jersey emerging technology business , or in a qualified venture fund , if the New Jersey emerging technology business is either located in a qualified opportunity zone pursuant to 26 U.S.C. § 1400Z-1 , or a low-income community as defined in subparagraph (e) of 26 U.S.C. § 45D or certified by the State as a minority business or a women's business pursuant to P.L.1986,

c. 195 ( C.52:27H-21.17 et seq. ) and, in the case of a qualified venture fund, if the qualified venture fund commits

by contract to invest 50 percent of its funds in diverse entrepreneurs . b. The amount of the credit allowed pursuant to this section shall be applied against

the tax otherwise due under the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. , after all other credits and payments. If the credit exceeds the amount of tax liability otherwise due, that amount of

excess shall be an overpayment for the purposes of N.J.S.54A:9-7 , provided, however, that subsection (f) of N.J.S.54A:9-7 shall not apply. c. (1) A partnership shall not be allowed a credit under this section directly, but

the amount of credit of a taxpayer in respect of a distributive share of partnership

income under the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. , shall be determined by allocating to the taxpayer that proportion of the credit

acquired by the partnership that is equal to the taxpayer's share, whether or not

distributed, of the total distributive income or gain of the partnership for its taxable

year ending within or with the taxpayer's taxable year. For the purposes of subsection b. of this section, the amount of tax liability that

would be otherwise due of a taxpayer is that proportion of the total liability of

the taxpayer that the taxpayer's share of the partnership income or gain included

in gross income bears to the total gross income of the taxpayer. (2) The credit for a corporation that has made a valid election as a New Jersey S

corporation pursuant to section 3 of P.L.1993, c. 173 ( C.54:10A-5.22 ) may be applied by the shareholders of the S corporation against the tax liability

otherwise due under the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. , provided that the amount of credit that may be used by a shareholder of the S corporation

shall be determined by allocating to each shareholder of the S corporation that proportion

of the tax credit of the S corporation that is equal to the shareholder's proportionate

share of the S corporation, whether or not distributed, of the total distributive

income or gain of the S corporation for its tax period ending with or within the shareholder's

tax period, and the credit may be applied by the shareholders against the tax liability

otherwise due pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. d. The Executive Director of the New Jersey Economic Development Authority, in consultation

with the director, shall adopt, pursuant to the “Administrative Procedure Act,” P.L.1968,

c. 410 ( C.52:14B-1 et seq. ), rules and regulations that are necessary to implement sections 1 through 3 of P.L.1997, c. 349 ( C.54:10A-5.28 through C.54:10A-5.30 ) and this section, including, but not limited to: examples of and the determination

of qualified investments of which applicants shall provide documentation with their

tax credit application; the promulgation of procedures and forms necessary to apply

for a credit; provisions for recapture in the event a taxpayer receives a credit on the basis of

its commitment to transfer cash to a qualified venture fund and it does not fund its

commitment; and provisions for credit applicants to be charged an initial application fee and

ongoing service fees to cover the administrative costs related to the credit. The amount of credits approved by the Executive Director of the New Jersey Economic

Development Authority and the Director of the Division of Taxation in the Department

of the Treasury, pursuant to subsection a. of this section and pursuant to section

3 of P.L.1997, c. 349 ( C.54:10A-5.30 ), shall not exceed a cumulative total of $35,000,000 in any calendar year to apply against the tax imposed pursuant to section 5 of P.L.1945,

c. 162 ( C.54:10A-5 ), and the tax imposed pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. If the cumulative amount of credits allowed to taxpayers in a calendar year exceeds

the amount of credits available in that year, then taxpayers who have first applied

for and have not been allowed a credit amount for that reason shall be allowed, in

the order in which they have submitted an application, the amount of the tax credit

on the first day of the next succeeding calendar year in which tax credits under this

section and section 3 of P.L.1997, c. 349 ( C.54:10A-5.30 ) are not in excess of the amount of credits available. e. As used in this section: “ Advanced computing ” means a technology used in the designing and developing of computing hardware and

software, including innovations in designing the full spectrum of hardware from hand-held

calculators to super computers, and peripheral equipment. “ Advanced materials ” means materials with engineered properties created through the development of specialized

processing and synthesis technology, including ceramics, high value-added metals,

electronic materials, composites, polymers, and biomaterials. “ Biotechnology ” means the continually expanding body of fundamental knowledge about the functioning

of biological systems from the macro level to the molecular and sub-atomic levels,

as well as novel products, services, technologies, and sub-technologies developed

as a result of insights gained from research advances which add to that body of fundamental

knowledge. “ Carbon footprint reduction technology ” means a technology using equipment for the commercial, institutional, and industrial

sectors that: increases energy efficiency; develops and delivers renewable or non-carbon-emitting

energy technologies; develops innovative carbon emissions abatement with significant

carbon emissions reduction potential; or promotes measurable electricity end-use

energy efficiency. “ Control ” with respect to a corporation, means ownership, directly or indirectly, of stock

possessing 80 percent or more of the total combined voting power of all classes of

the stock of the corporation entitled to vote; and “ control ,” with respect to a trust, means ownership, directly or indirectly, of 80 percent

or more of the beneficial interest in the principal or income of the trust. The ownership of stock in a corporation, of a capital or profits interest in a partnership

or association or of a beneficial interest in a trust shall be determined in accordance

with the rules for constructive ownership of stock provided in subsection (c) of section 267 of the federal Internal Revenue Code of 1986 ( 26 U.S.C. s.267 ), other than paragraph (3) of subsection (c) of that section. “ Controlled group ” means one or more chains of corporations connected through stock ownership with

a common parent corporation if stock possessing at least 80 percent of the voting

power of all classes of stock of each of the corporations is owned directly or indirectly

by one or more of the corporations and the common parent owns directly stock possessing

at least 80 percent of the voting power of all classes of stock of at least one of

the other corporations. “ Director ” means the Director of the Division of Taxation in the Department of the Treasury. “ Diverse entrepreneur ” means a New Jersey based business that meets the criteria for a minority business

or female business set forth in section 3 of P.L.1983, c. 482 ( C.52:32-19 ). “ Electronic device technology ” means a technology involving microelectronics, semiconductors, electronic equipment

and instrumentation, radio frequency, microwave and millimeter electronics, and optical

and optic-electrical devices, or data and digital communications and imaging devices. “ Information technology ” means software publishing, motion picture and video production, television production

and post-production services, telecommunications, data processing, hosting and related

services, custom computer programming services, computer system design, computer facilities

management services, other computer related services, and computer training. “ Life sciences ” means the production of medical equipment, ophthalmic goods, medical or dental instruments,

diagnostic substances, biopharmaceutical products, or physical and biological research. “ Medical device technology ” means a technology involving any medical equipment or product (other than a pharmaceutical

product) that has therapeutic value, diagnostic value, or both, and is regulated by

the federal Food and Drug Administration. “ Mobile communications technology ” means a technology involving the functionality and reliability of the transmission

of voice and multimedia data using a communication infrastructure via a computer or

a mobile device, that shall include, but not be limited to, smartphones, electronic

books and tablets, digital audio players, motor vehicle electronics, home entertainment

systems, and other wireless appliances, without having connected to any physical or

fixed link. “ New Jersey based business ” means a company with fewer than 225 employees, of whom at least 75 percent are filling

a position in New Jersey, that is doing business, employing or owning capital or property,

or maintaining an office in this State. “ New Jersey emerging technology business ” means a company with fewer than 225 employees, of whom at least 75 percent are filling

a position in New Jersey, that is doing business, employing or owning capital or property,

or maintaining an office in this State and: has qualified research expenses paid

or incurred for research conducted in this State; conducts pilot scale manufacturing

in this State; or conducts technology commercialization in this State in the fields

of advanced computing, advanced materials, biotechnology, carbon footprint reduction

technology, electronic device technology, information technology, life sciences, medical

device technology, mobile communications technology, or renewable energy technology. “ New Jersey emerging technology business holding company ” means any corporation, association, firm, partnership, trust or other form of business

organization, but not a natural person, which directly or indirectly, owns, has the

power or right to control, or has the power to vote, a controlling share of the outstanding

voting securities of a corporation or other form of a New Jersey emerging technology

business. “ Partnership ” means a syndicate, group, pool, joint venture, or other unincorporated organization

through or by means of which any business, financial operation, or venture is carried

on, and which is not a trust or estate, a corporation, or a sole proprietorship. “ Pilot scale manufacturing ” means design, construction, and testing of preproduction prototypes and models in

the fields of advanced computing, advanced materials, biotechnology, carbon footprint

reduction technology electronic device technology, information technology, life sciences,

medical device technology, mobile communications technology, or renewable energy technology,

other than for commercial sale, excluding sales of prototypes or sales for market

testing if the total gross receipts, as calculated in the manner provided in section

6 of P.L.1945, c. 162 ( C.54:10A-6 ), from the sales of the product, service, or process do not exceed $1,000,000. “ Qualified investment ” means the non-refundable transfer of cash to a New Jersey emerging technology business

or to a New Jersey emerging technology business holding company by a taxpayer that

is not a related person of the New Jersey emerging technology business or the New

Jersey emerging technology business holding company, the transfer of which is in connection

with either: a transaction between or among the taxpayer and the New Jersey emerging

technology business or the New Jersey emerging technology holding company or both

in exchange for stock, interests in partnerships or joint ventures, licenses (exclusive

or non-exclusive), rights to use technology, marketing rights, warrants, options,

or any items similar to those included herein, including, but not limited to, options

or rights to acquire any of the items included herein; or a purchase, production,

or research agreement between or among the taxpayer and the New Jersey emerging technology

business or the New Jersey emerging technology holding company or both. “ Qualified investment ” also means the non-refundable transfer of cash or irrevocable contractual commitment

to transfer cash to a qualified venture fund. “ Qualified research expenses ” means qualified research expenses, as defined in section 41 of the federal Internal Revenue Code of 1986 ( 26 U.S.C. s.41 ), as in effect on June 30, 1992, in the fields of advanced computing, advanced materials,

biotechnology, electronic device technology, information technology, life sciences,

medical device technology, mobile communications technology, or renewable energy technology. “ Qualified venture fund ” means a venture fund required by contract to invest a minimum of 50 percent of its

funds in New Jersey based businesses that the authority, in its sole discretion, based

upon the qualified venture fund's investment history, if any, its private placement

memorandum and other relevant information, has determined has the capacity to make

the minimum investment. “ Related person ” means: a corporation, partnership, association or trust controlled by the taxpayer; an individual, corporation, partnership, association or trust that is in the control

of the taxpayer; a corporation, partnership, association or trust controlled by an individual, corporation,

partnership, association or trust that is in the control of the taxpayer; or a member of the same controlled group as the taxpayer. “ Renewable energy technology ” means a technology involving the generation of electricity from solar energy; wind

energy; wave or tidal action; geothermal energy; the combustion of gas from the

anaerobic digestion of food waste and sewage sludge at a biomass generating facility;

the combustion of methane gas captured from a landfill; and a fuel cell powered by

methanol, ethanol, landfill gas, digestor gas, biomass gas, or other renewable fuel

but not powered by a fossil fuel. “ Venture fund ” means a partnership, corporation, trust, or limited liability company that invests

cash in a business during the early or expansion stages of a business in exchange

for an equity stake in the business in, which the investment is made. Venture firm may include a venture capital fund, a family office fund, or a corporate

investor fund, provided that a professional manager administers the venture firm. “ Verified transfer of funds ” means a non-refundable transfer of funds equal to 100 percent of the taxpayer's

qualified investment in the New Jersey emerging technology business holding company

to a New Jersey emerging technology business by the New Jersey emerging technology

business holding company that is accompanied by documentation, as required by the

New Jersey Economic Development Authority, which provides proof of a cash transaction

originating with a taxpayer and concluding with a New Jersey emerging technology business,

provided that the transactions from origin to destination occur within the same taxable

year. The definitions of “advanced computing,” “advanced materials,” “biotechnology,” “carbon

footprint reduction technology,” “electronic device technology,” “information technology,”

“life sciences,” “medical device technology,” “mobile communications technology,”

“New Jersey emerging technology business,” “pilot scale manufacturing,” and “renewable

energy technology” may be modified by regulation to conform to definitions in other

programs administered by the authority.