Frequently Asked Questions

Companies that report 20 percent or more of their revenue coming from retail sales are not eligible for a CAPCO investment. The Comptroller’s office will use the state sales and use tax form to determine whether a prospective investment meets this requirement.

The statute requires an annual CAPCO review for the preceding calendar year. You may request a letter certifying the benchmark only after your audit is complete. If you reach an investment benchmark with an investment in 2008, the audit for that investment would not occur until 2009.

Credits may be claimed with Form AP-214 (PDF).

For Program One, tax credits may be taken in 2009 for tax year 2008. For Program Two, the credits may be taken in 2013 for tax year 2012.

The CAPCO Program is an economic development program designed to encourage investments in small companies in various industries and create jobs for Texans.

Becoming a CAPCO can be a difficult and time-consuming process. Many requirements are outlined in state law. These include:

• a completed Application for Certification form provided by the Comptroller;
• a nonrefundable application fee of $7,500;
• an audited balance sheet with an unqualified opinion from an independent certified public accountant;
• a Statement of Auditing Standard No. 61 communication, provided by the auditor not more than 35 days before the date of application;
• documentation that the prospective CAPCO is duly organized and qualified to do business in Texas;
• evidence of an equity capitalization of at least $500,000 in the form of unencumbered cash or equivalents; and
• evidence that at least two principals or persons engaged to manage the funds of the applicant have at least four years of experience in the venture capital industry.

The rules governing the CAPCO program are available online via the Secretary of State and the Texas Legislature.

A strategic investment area is an area of Texas qualifying at the time of investment as a Strategic Investment Area (SIA) under Texas Tax Code Chapter 171, Subchapter O, or after the expiration of that subchapter, an area qualified as an SIA under that subchapter immediately before its expiration. Essentially, an SIA is a rural, low-income Texas county. See which counties qualify as Strategic Investment Areas. (PDF)

“Low-income community” has the meaning assigned by the Internal Revenue Code of 1986, 45D(e). These communities are designated as low-income according to their zip codes.