Monday, March 08, 2010

Capital Gains Exclusion on Technology Investments Goes to VA Governor

The Virginia Biotechnology Association's (VaBIO) legislation to provide incentives for investments in biotech and other advanced technology companies is on the way to Governor Robert McDonnell's desk for signature. VaBIO and NVTC, the Northern Virginia Technology Council, are encouraging the Governor to amend the bill with an "emergency clause" so that it will take immediate effect upon his signature. Otherwise, there would actually be an unintended disincentive to invest until July 1st.

This legislation will make Virginia the most welcoming home for advanced technology companies seeking capital for growth. The new law will exclude capital gains from state taxes for all investors--private, angels, venture funds, and corporations, as long as the investment was made in a qualified, biotech or advanced technology firm. Our congratulations to the Virginia Bioscience Legislative Caucus for championing this legislation and to our two chief patrons, Senator Mark Herring (D-Loudoun) and Delegate Sam Nixon (R-Chesterfield). The concept was also highlighted by Governor McDonnell's Transition Team before taking office. Here are the details:

Bill Summary: Income taxes; recognition of income from capital gains. Grants an income tax deduction for any income taxed as a long-term capital gain for federal income tax purposes or any income taxed as investment services partnership interest income, on or after January 1, 2011, that is related to a qualified investment in a technology and science start-up business having a principal office or facility in the Commonwealth and less than $3 million in annual revenues in the fiscal year prior to the investment. The deduction would relate to investments made between July 1, 2010, and June 30, 2013.

HB 523 (Delegate Nixon)
SB 426 (Senator Herring)

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