There are a couple of reasons to think that last post’s conclusion is a little too optimistic.
First, in this post, we dive briefly into the qualified business list – you can download the January 2020 pdf from this link.
There are plenty of software development, R&D, IT services, and medical devices companies – all the types of companies the credit was intended to encourage. Companies with relatively modest capital needs, high potential for job creation and higher salaries, companies that will succeed through innovation.
But you might notice a few companies that aren’t obviously those kinds of companies. Several traditional manufacturing companies, multiple breweries, a nursing care facility, several “wholesalers” that cover a wide range of things… These companies are all valuable and important, but they aren’t really what the credit was supposed to be fostering.
We don’t begrudge anyone applying for qualification or their investors getting the credit – they follow the rules as they’re written and should get the benefits they can. But if a significant amount of the credit is being used by businesses that aren’t “angel investments,” our conclusion in the first few posts in this series is off, and the celebrations should be muted.