The Interest Charge Domestic International Sales Corporation (IC-DISC) regime remains a powerful tool for U.S. exporters, offering significant tax benefits by allowing a portion of export income to be taxed at favorable rates. A critical component of the IC-DISC calculation is the treatment of “export promotion expenses,” which can increase the amount of income allocated […]
Not Prejudicing the Interests of the Government under Treas. Reg. § 301.9100-3 Regarding a late-filed IC-DISC Election (Form 4876-A) In the context of Treas. Reg. § 301.9100-3, when the IRS considers granting an extension of time to make a regulatory election (such as filing Form 4876-A to elect IC-DISC status), a key requirement is that […]
According to the National Association of Manufacturers, exports support over 12 million jobs in the U.S. alone. Yet many exporters are still missing out on one of the most powerful, and legal, federal tax incentives available: the Interest Charge Domestic International Sales Corporation, or IC-DISC. An IC-DISC tax strategy allows qualifying U.S. exporters to convert […]
Exporting U.S.-made products or services? Without an effective IC-DISC tax strategy in place this year, your business could be leaving significant federal tax savings on the table. An IC-DISC tax strategy is a method used by qualifying U.S. exporters to legally reduce federal income taxes by channeling export profits through a separate entity called an […]
For U.S. businesses involved in exporting, the Interest Charge Domestic International Sales Corporation (IC-DISC) offers a valuable tax-saving opportunity. As the last remaining federal income tax incentive for U.S. exporters, IC-DISC allows eligible companies to significantly reduce their tax burden. In this article, we’ll walk through a detailed IC-DISC example, illustrating how it works in […]
In today’s complex tax environment, the DISC tax structure continues to be a critical tool for U.S. exporters aiming to stay competitive in global markets. For U.S. companies that export products or services, the Interest Charge Domestic International Sales Corporation (IC-DISC) remains a powerful and often underutilized federal income tax incentive. By implementing the right […]
Navigating the U.S. tax code can be a challenge—especially for export-driven businesses aiming to reduce their tax burden without running afoul of regulations. One little-known but highly effective strategy is the use of an Interest Charge Domestic International Sales Corporation, or IC-DISC. IC-DISC dividends can be considered qualified dividends if they meet specific IRS requirements. […]
In IRS Advice Memorandum AM 2022-005, the Office of Chief Counsel reaffirmed that distributions from a Domestic International Sales Corporation (DISC) to foreign shareholders are treated as effectively connected income (ECI) under Internal Revenue Code § 996(g), even where an applicable U.S. income tax treaty would otherwise provide reduced withholding rates on dividends. This position […]
Taxpayers utilizing an IC-DIS should note the continuing importance of Schedules K-2 and K-3 in reporting international income. Since 2022, S corporations and partnerships receiving IC-DISC dividends must include this information to comply with the requirements of Schedule K-2/K-3. Although IC-DISCs are domestic entities (Treas. Reg. § 1.992-1(a)(1)), dividends paid by an IC-DISC are classified […]
The IRS’s expanded international reporting requirements have made it essential for S corporations and partnerships with IC-DISCs to understand how to properly report dividends on Form Schedule K-2/K-3. Below is a summary of key developments that may affect Forms 1120S or 1065. 1. Schedule K-2/K-3 Applies to Pass-Through Entities with International Activity 2. IC-DISC Dividends […]
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