The Qualified New Business Venture Capital Gains (QNBV Cap Gains) certification is designed to encourage investors with long-term capital gains to use the proceeds of those gains to invest in Wisconsin companies developing new products or processes or conducting research and development. Investors that make investments in companies certified under this program can defer Wisconsin Capital Gains Tax as prescribed under Revenue Statute 71.05 (24). This program is effective January 1, 2011.
Businesses engaged in developing new products or business processes, are in the manufacturing or agriculture industries, or are processing and assembling products and are conducting research and development activities may be eligible to be certified under the program. This designation is designed to assist businesses in their efforts to attract investors by allowing investors to defer long-term capital gains tax for investments made in certified companies using the proceeds of a capital gain.
Businesses engaged in real estate development, insurance, banking, lending, lobbying, political consultation, professional services provided by attorneys, accountants, business consultants, physicians or health care consultants, wholesale or retail trade, leisure, hospitality, transportation or construction are not eligible for the program.
QNBV Cap Gains companies will be certified by WEDC on an annual basis. Businesses wishing to continue their certification in the program must submit information annually.
Benefits to Investors
For taxable years beginning after December 31, 2010, a claimant may subtract from federal adjusted gross income any amount, up to $10,000,000, of a long-term capital gain if the claimant does all of the following:
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Deposits the gain into a segregated account in a financial institution.
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Within 180 days after the sale of the asset that generated the gain, invests all of the proceeds in the account described above, in a QNBV Cap Gains certified company.
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After making the investment, the investor notifies the Department of Revenue that the investor will not declare the gain on its income tax return because the investor has reinvested the capital gain as described above. The form shall be sent to the Department of Revenue along with the claimant’s income tax return for the year to which the claim relates.
The cost basis of the investment into the certified company will be calculated by subtracting the capital gain invested into the certified company from the total amount of the investment in that company.
Click here to learn about Qualified New Business Ventures (Wisconsin Statute 238.20).
For more information about Qualified New Business Venture Capital Gains, please contact Chris Schiffner, 608-267-2425 Chris.Schiffner@wedc.org
*Interested parties should be prepared to submit documents including but not limited to a business plan or a detailed project summary.
