Maximizing tax credits offered by the IRS and various states around the US is key to maximizing your financial position. There are many types of tax credits available for both individuals and businesses. One of the better ones is for angel investors in the State of SC who invest in a qualified business. Investors can attain up to 35% as a tax credit. This tax credit was created by Nikki Haley under the High Growth Small Business Creation Act, alternatively known as the Angel Investor Act on June 14, 2013.



Let's look at the math and see why this one is so important. If you are an accredited investor in South Carolina who puts $100,000 into a qualified business like NannyPod for example, you could potentially get a 35% tax credit.

If a company is offering a convertible note, with a minimum valuation of $2M and a maximum valuation of $5M, then the $100,000 that you put in could potentially convert to between 5% and 2% equity ownership. However, due to the 35% tax credit, you actually realize this ownership for an investment cost of $65,000.

$100,000 x 35% = $35,000
$100,000 - $35,000 = $65,000

Hence, your investment of $100,000, really turns out to be an investment of $65,000.

Now let's look at what happens when the company is sold, and you get a return on your investment. If the company you invested in does well, and has a successful exit strategy of say $50M in 5-6 years time, then your worst case scenario 2% ownership is now worth $1M. 



If we calculate the return on $100K growing to $1M, then you made 1000%. However, if we calculate the return on $65K invested due to receiving the $35K tax credit, then you actually made 1538%, an additional 538% more.

This clearly illustrates why maximizing tax credits can be of huge benefit, especially to angel investors in the State of SC. 


The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Hedges Wealth Management.

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Location: Hedges Wealth Management, 310 Seaport Ln, Mt Pleasant, SC 29464, USA
Labels: 35% Act Angel Investor Charleston Miami Charlotte Atlanta Financial Advisor SC NC FL GA NannyPod Return SC tax credit

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Global events, such as the intensely divided presidential election that we just lived through, are certain to generate some periods of market volatility of varying lengths in addition to a significant amount of stress. However, we urge financial advisors and investors to retain a few dos and don’ts to help manage post-election anxiety:

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Maximizing tax credits offered by the IRS and various states around the US is key to maximizing your financial position. There are many types of tax credits available for both individuals and businesses. One of the better ones is for angel investors in the State of SC who invest in a qualified business. Investors can attain up to 35% as a tax credit.

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We experienced first hand the creation of Exchange Rate Mechanism (ERM), Britain's exit from the ERM, the intro of the Euro, and now the exit from the EU (aka "Brexit").

After an extremely volatile quarter, the broad equity market indexes ended just about where they started. Risk assets began the year under heavy pressure, with the S&P 500 Index declining more than -10% to a 22-month low on February 11. Concerns over the global growth outlook and the impact of further weakness in crude oil prices weighed on investors, and investor sentiment hit levels of extreme pessimism.
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