IC-DISC: Mastering Intricacies of the Federal Tax Incentive for Exporters

Description

Only one federal tax incentive exists on the books specifically for U.S. businesses with export income: the IC-DISC. With a more than 100% increase in small-to medium-sized exporters since 1992, accounting firms can't afford to be in the dark on this lucrative planning strategy.

An IC-DISC, or Interest Charge-Domestic International Sales Corporation, can offer exporters a substantial tax savings by letting them create a books-only entity that pays tax on export income at a 15% capital gains rate rather than a 35% income tax rate.

Accounting professionals and corporate tax specialists must stay current to navigate the highly detailed and often confusing aspects of IC-DISCs, keeping abreast of developments such as the U.S. Tax Court's Hellweg and Ohsman decisions (Roth IRA payments to DISCs didn't incur excise tax).

Listen as our panel of veteran advisors prepares you for both complexities in entity formation and asset management, and benefits to leverage with this lucrative tax-saving strategy.

Outline

1. Background and tax benefits of IC-DISCs
   1. How the IC-DISC came to be
   2. Tax benefits of IC-DISCs
   3. Recent developments involving IC-DISCS
      1. U.S. Tax Court, Erin L. Hellweg et al. v. Commissioner
      2. U.S. Tax Court, Ohsman v. Commissioner
      3. Other relevant guidance and rulings
2. Maximizing tax benefits of the IC-DISC
   1. Meeting IRS requirements
   2. Meeting the three tests for “buy-sell” DISCs
3. Implementing various ownership structures for the IC-DISC
   1. Privately-held company: C, S, LLC partnership
   2. Publicly-traded corporation
   3. Treaty benefits
   4. Sourcing benefits
4. Compliance and reporting By IC-DISCs
   1. Calculating the amount of commissions
   2. Complying with the no-loss rule
   3. Completing IRS Form 1120-IC-DISC
   4. Avoiding and adapting to potential pitfalls of the IC-DISC

Benefits

The panel will guide you through every critical aspect of IC-DISC creation and tax planning, including:

• Maximizing the unique IC-DISC tax benefits.
• Meeting the three requirements to receive income from export property sales.
• Structuring the IC-DISC entity in order to provide liquidity for the parent and shareholders.
• Completing IRS Form 1120-IC-DISC, the unique tax return that applies only to the IC-DISC entity.

Upon completing this seminar, you will be familiar with all key aspects of, and latest developments involving, the IC-DISC tax incentive, including how to compile the data needed and complete the more complex fields on Form IC-DISC. You also will learn advanced planning strategies for entity formation and tax accounting under the IC-DISC structure, using specific examples of various entity arrangements.

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