Tax Dictionary
Small business investment company
A small business investment company is a term which, for federal income tax purposes, is restrictred to a company operating under the Small Business Investment Act of 1958, that is, a company authorized by that Act to provide equity capital to small business concerns through the purchase of convertible debentures. These companies and their investors are given special income tax advantages, such as a 100 percent dividends-received credit and ordinary loss deductions for the worthlessness of stock or securities held by the investment company or stock issued by the company.