ANGEL VENTURE CAPITAL GAIN DEFERRAL
See Form IN-111, Section 3, Line 14d
See also 32 VSA §5930v
Vermont excludes 40% of capital gain from Vermont income tax. A taxpayer may defer
Vermont income tax on the remaining 60% of a capital gain when investing the capital
gain in an eligible venture capital investment within two years of receipt of the gain.
To claim the deferral on the Vermont income tax return, complete the Angel Investment
Capital Gain Deferral Worksheet.
A qualified investor is an individual or pass-through entities of a partnership, limited
liability company or S corporation that are eligible for the deferral. Partnership, limited
liability company or S corporation allocate the capital gain deferral amount to its
partners, members or shareholders. The investor cannot be, however, a substantial owner
of the business receiving the investment.
A substantial owner is a person who
• Holds 25% or more ownership interest in the business after the investment including
attribution of ownership interests of the person’s spouse, parents, spouse’s parents,
siblings, and children; or
• Controls by, or has actual control of, the business receiving the investment through
any combination of ownership or management.
An eligible venture capital investment is an investment up to $200,000 of capital gains
by one person (or pass through entity) in a qualified business for expenditure by that
business on plant, equipment, research, and development or as working capital and
represents at-risk debt investment1 or equity investment.
A qualified business is a business with its principal place of business in Vermont; and
had annual gross sales of $3,000,000 or less in the year preceding the investment; and it
is primarily engaged in
• creation or production of tangible personal property for sale; or
• development or application of advanced technologies2; or
• production of a product or service that is or will be sold or provided
predominantly outside the state.