Sec. 201 Tax credit for small business investment
“25E. Small business investment
“(a) In general—In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter an amount equal to 20 percent of the amount paid or incurred for qualified small business investments during the taxable year.
“(b) Limitation—With respect to any qualified small business investment in any corporation or partnership, the amount paid or incurred by any taxpayer which is taken into account under subsection (a) shall not exceed $250,000 ($500,000 in the case of a joint return), reduced by the amount taken into account under such subsection with respect to investments by the taxpayer in such corporation or partnership for all prior taxable years.
“(c) Qualified small business investment—For purposes of this section—
“(1) In general—The term qualified small business investment means any small business stock and any small business partnership interest.
“(2) Small business stock—The term small business stock means any stock in a domestic corporation acquired by the taxpayer at its original issue (directly or through an underwriter) solely in exchange for cash, if—
“(A) such corporation is an eligible small business (as defined in section 41(b)(3)(D)(ii));
“(B) such corporation is engaged primarily in the trade or business of manufacturing, processing, assembling, or researching and developing products or in the trade or business of agriculture, technology, or life science;
“(C) such corporation has been in existence for less than 5 years as of such acquisition;
“(D) such corporation has fewer than 75 employees as of such acquisition;
“(E) more than 50 percent of the corporation’s employees perform substantially all of their services in the United States as of such acquisition; and
“(F) such stock is designated by the corporation for purposes of this paragraph.
“(3) Small business partnership interest—The term small business partnership interest means any capital or profits interest in a domestic partnership acquired by the taxpayer from the partnership solely in exchange for cash, if—
“(A) such partnership is an eligible small business (as defined in section 41(b)(3)(D)(ii));
“(B) such partnership is engaged primarily in the trade or business of manufacturing, processing, assembling, or researching and developing products or in the trade or business of agriculture, technology, or life science;
“(C) such partnership has been in existence for less than 5 years as of such acquisition;
“(D) such partnership has fewer than 75 employees as of such acquisition;
“(E) more than 50 percent of the partnership’s employees perform substantially all of their services in the United States as of such acquisition; and
“(F) such capital or profits interest is designated by partnership for purposes of this paragraph.
“(d) Carryforward of unused credit—If the credit allowable under subsection (a) exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under this section. Such excess shall not be taken into account under this subsection for such succeeding taxable year or any taxable year succeeding such year.”