IC-DISC

IC-DISC

IC-DISC


Enacted by Congress in 1984, IC-DISC (Interest Charge-

Domestic International Sales Corporation) provides permanent
annual tax savings and other benefits for exporters of goods
manufactured in the United States. 

 

 

IC-DISC benefits include:

  • Recurring permanent tax savings for shareholders
  • Typically high benefits relative to costs
  • Deferral mechanism when earnings are not distributed out of IC-DISC
  • The ability to tax efficiently, which helps manage cash flow
  • Potential retirement planning flexibility
  • Analysis of allocation and apportionment methodologies
  • Multi-dimensional profitability analysis, useful in business review
  • Transactional taxable income calculation, reconciling tax-return data to financial information
  • Transparent paper trail

With an engagement team that works on- or off-site, WTP’s efficient implementation of IC-DISC does not impact customers or operations. It relies on data that is easily accessible, and it yields accurate, timely results for inclusion in a tax return.

The implementation of IC-DISC requires the following steps:

  1. Exporting company shareholders create new entity, which elects IC-DISC treatment
  2. Exporting company and IC-DISC entity execute a commission agreement
  3. Exporting company pays IC-DISC a commission on export sales
  4. Exporting company deducts the commission
  5. Commission income of IC-DISC is not taxed
  6. IC-DISC can pay a dividend in current or future tax year
  7. IC-DISC dividend is typically a qualified dividend, taxed at 15%

Click Image to Download Example