Section 280-RICR-20-20-11.5 - Capital Gains ExclusionA. General: The calculation of business corporation tax, public service corporation tax, bank excise tax or personal income tax may exclude long term capital gains from the sale or exchange of an interest in a qualifying business entity or certified venture capital partnership.B. Calculation and Documentation: To the extent that a long term capital gain (Internal Revenue Code 26 U.S.C. § 1222(3) ) was included in the calculation of tax under R.I. Gen. Laws Chapter 44-11, R.I. Gen. Laws Chapter 44-13, R.I. Gen. Laws Chapter 44-14 or R.I. Gen. Laws Chapter 44-30, the gain shall be excluded if:1. it is recognized by a partner in a certified venture capital partnership from the sale or exchange of an interest in the partnership, or2. it is a partner's distributive share (from a certified venture capital partnership) of a long term capital gain recognized by the partnership from the sale or exchange of an interest in a qualifying business entity; or3. it is recognized by an entrepreneur from the sale or exchange of an interest in a qualifying business entity.C. EXAMPLE: B Corporation is a one-half partner in a certified venture capital partnership. During the year, the partnership sold an interest in a qualifying business entity resulting in a long term capital gain of $250,000. The partnership invests 100% in qualifying activities. B Corporation is entitled to exclude its distributive share or $125,000 from its calculation of business corporation tax under R.I. Gen. Laws Chapter 44-11. Because of the length of time which may pass between the certification of businesses as either qualifying business entities or as certified venture capital partnerships, the investment in these businesses and the subsequent sale or exchange resulting in long term capital gains, taxpayers seeking exclusion of the gain must provide proof of the date and amount of the investment in the qualifying business entity and/or certified venture capital partnership. Taxpayers must also provide documentation that the entity or the partnership had been property certified by the Department of Economic Development when the taxpayer acquired the interest. Additionally, in the case of the distributive share from a certified venture capital partnership, it is the taxpayer's responsibility to secure and retain documentation that the business entity in which the partnership invested was properly certified by the Department of Economic Development at the time the partnership invested. 280 R.I. Code R. § 280-RICR-20-20-11.5