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The Utah Venture Capital Enhancement Act (UC §63M-1-1218) authorizes a refundable credit on Utah tax returns for redemption of a certificate issued by the Utah Capital Investment Corporation, a State of Utah board under the Governor's Office of Economic Development. Investors in the Utah Venture Capital Enhancement Act's Utah Fund of Funds will be given a Utah tax credit if repayments of obligations are not met.
The Utah Capital Investment Board will deliver a Utah tax certificate, which is transferable, to an investor in return for an investment in the Utah Fund of Funds, if the investment repayment terms are not satisfied with returns from the Utah Fund of Funds investment. This Utah tax credit may be redeemed by "an individual, partnership, limited liability company, corporation, association, organization, business trust, estate, trust, or any other legal or commercial entity" (UC §63M-1-1203(10)).
The law provides that the Utah Venture Capital Enhancement Act tax credits issued may total no more than $300,000,000 overall, with no more than $20,000,000 of credits for each $100,000,000 increment of credits redeemable in any one year.
The initial provision took effect on July 1, 2004 as a nonrefundable credit, but was changed to a refundable credit, effective March 1, 2005, with the passage of H.B. 179 (2005 Legislative General Session). The Utah Venture Capital Enhancement Act states that "Once moneys are invested by a designated investor, the certificate: is binding on the board; and may not be modified, terminated, or rescinded" (UC §63M-1-1218(7)).
The Utah State Tax Commission has determined that due to the limited and restricted use of the credit, no reference to it will be made in the Utah tax instruction booklets. The procedures for claiming the credit will be given as part of the certificate when issued to an investor. The certificate will not be submitted with the tax return, but may be requested for verification later.
A numeric code must be used on the Utah individual, corporation, partnership or fiduciary return to claim the refundable credit. The code to be used is "49". The investor claiming the credit should see the separate instructions for the appropriate tax return for how to claim a refundable credit using this code.
To locate specific tax forms and instructions, go to tax.utah.gov/forms and click on the form/instructions desired.