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IC-DISC Planning

Multiple forms of currency

Exporters may be missing a lucrative U.S. tax incentive. Manufacturers, architects and engineering firms that provide goods or services overseas are among the types of companies that qualify for the Interest-Charge Domestic International Sales Corporation (IC-DISC) option. Closely held, international public and private companies may also qualify, but because of the complexity involved, many companies do not take advantage of this tax deferral opportunity.

CBIZ tax specialists work closely with clients maximize the advantages offered by the IC-DISC. We help U.S. companies set up separate corporate entities (the interest charge international sales corporations). The IC-DISCs are paid a deductible commission based on the income derived from qualified export transactions. They pay no federal income tax and distribute income to their owners as qualified dividends. Because the income is distributed this way, owners and shareholders benefit from the capital gain tax rate, 20 percent, which is substantially lower than the individual or corporate tax rate (which can be up to 39.6 percent.)

Our professionals have a depth of experience working with companies to form IC-DISCs. We help clients navigate the complexities involved, from filing for the IC-DISC election to meeting tests of qualified export receipts. Through our comprehensive approach to this tax deferral, we help clients save anywhere from tens of thousands of dollars to millions of dollars annually.

$1,000,000

The sooner qualifying companies apply for the IC-DISC, the sooner they can realize their potential tax savings. Our IC-DISC specialists stand at the ready to assist your company capitalize on its tax deferral opportunities.
 

 
  Without IC-DISC With IC-DISC Net Savings
Export Sales $5,000,000 $5,000,000  
Net Margin 20% 20%  
Net Profit $1,000,000 $1,000,000  
IC-DISC Commission (50%)   -500,000  
Taxable Income $1,000,000 $500,000  
Taxable Rate 39.6% 39.6%  
Shareholder Level Taxation
on Flow Through Income
$396,000 $198,000 $198,000
Dividend to Shareholder   $500,000  
Tax Rate (qualified dividend rate 20% plus 3.8% Medicare surtax)   23.8%  
Shareholder Level Taxation   $119,000 -119,000
Total Taxation $396,000 $317,000 $79,000
Key Contact
Don Reiser Don Reiser Managing Director
Featured Content
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