SB119 Summary: Early Stage Investment Act

• Establishes a refundable tax credit for qualified investors who invest in Alabama entrepreneurial businesses, administered by the Alabama Department of Commerce.

• Defines eligible businesses as those with 20 or fewer employees, less than $500,000 in annual revenues, less than $1 million in prior funding, less than 3 years in operation, and domiciled in Alabama; excludes professional services, banking, real estate, construction, insurance, oil and gas, and gambling industries.

• Provides a tax credit equal to 50 percent of the investment amount, divided equally over 5 taxable years, capped at $100,000 per year per business and $10 million total per calendar year statewide.

• Requires investments to be at-risk with no security or guarantees, prohibits investor involvement as principal owner, and restricts use of proceeds to capital improvements, equipment, research and development, or working capital.

• Tax credits are refundable, transferable, assignable, and may be carried forward for 10 years; effective for taxable years beginning January 1, 2014.