Bill > HB169

This bill establishes a new "capital gain reinvestment income tax credit" for individuals in New Mexico, aiming to encourage local investment and the sale of capital assets within the state. To qualify, a taxpayer must reinvest income from a net capital gain (which is defined by federal tax law as profit from selling a capital asset held for more than a year) into a "New Mexico business" within 24 months of acquiring the gain. A "New Mexico business" is generally defined as an entity with its main operations, majority of employees, and tangible assets in New Mexico, having 100 or fewer employees and less than $5 million in gross revenue, and not being a government, nonprofit, or primarily real estate-focused entity. The credit amount is the lesser of the tax paid on the net capital gain or the cost of the qualified reinvestment, which can be in cash, stock, or in-kind for "equity" (ownership stakes like stock or partnership interests) in a New Mexico business. Taxpayers must apply for a certificate of eligibility from the economic development department and provide it to the taxation and revenue department to claim the credit, and this credit cannot be claimed for the same investment that qualifies for the angel investment credit. Any credit amount exceeding the taxpayer's tax liability can be carried forward for up to five years, and the taxation and revenue department will report annually on the credit's effectiveness and cost.