90-8-203. No recapture -- unqualified investments -- penalty. (1) (a) If the amount invested by a taxpayer in a qualified Montana capital company or in a qualified Montana small business investment capital company is not used by the company for qualified investments as provided in 90-8-301, the taxpayer is not subject to a recapture provision for any tax credit claimed by the taxpayer but the company, except as provided in subsection (1)(b), is subject to the penalty provided for in 90-8-301(4).
     (b) The collection of a penalty under 90-8-301(4) from a small business investment company whose securities are guaranteed by the United States small business administration must be deferred until all accounts due under the terms of the guarantee of the securities are paid in full.
     (2) If a capital company does not invest its capital base in accordance with 90-8-301 and has paid or otherwise distributed funds to an investor or subsequent holder of the investment, the department of revenue may recover from the person receiving the distributed funds a penalty in an amount not to exceed the lesser of:
     (a) the amount of the tax credit received by the original investors; or
     (b) the amount of funds paid or otherwise distributed to the investor or the subsequent holder of the investment other than the United States small business administration or its designee. Dividends or distributions made in accordance with applicable law may not be included in the amount specified in this subsection (2)(b) unless the capital company has not invested its capital base in accordance with 90-8-301.

     History: En. Sec. 7, Ch. 554, L. 1983; amd. Sec. 6, Ch. 263, L. 1991; amd. Sec. 5, Ch. 576, L. 1991; amd. Sec. 6, Ch. 410, L. 1999.