IC-DISC 2.0: Moving Beyond the Basics to Pricing Commissions and Structuring Complex Corporate Entities

Designing Commission Strategies, Utilizing Trusts, and Setting Up Distributor Companies

Recording of a 90-minute CLE/CPE webinar with Q&A


Conducted on Thursday, February 2, 2017
Recorded event now available


This CLE/CPE webinar will provide tax counsel and advisers with an advanced guide to structuring Interest Charge-Domestic International Sales Corporation (IC-DISC) companies. The panel will go beyond the basics to address alternative and sophisticated structures (including agricultural co-ops), commission grouping strategies, and utilization of IC-DISCs in estate planning contexts. The event will detail state and local impact of various IC-DISC structures and offer illustrations of various specific structuring examples.

Description

The IC-DISC remains the most significant U.S. income tax break for export business owners. The majority of IC-DISC companies are pass-through entities, either S corporations or LLCs. However, the benefits of the IC-DISC structure continue to be under-utilized. In addition to meeting IRS tests for determining qualified export receipts, qualified export assets, and commissions, corporations also must understand and apply all available pricing methods and grouping options in order to achieve the maximum allowable tax benefits.

An IC-DISC structure provides significant tax saving opportunities for more complex entities if the operating documents are structured correctly.

Tax counsel and advisers need to fully grasp the formation rules to ensure that complex IC-DISC ownership structures and operating documents conform to IRS requirements to avail exporters of critical IC-DISC benefits.

Listen as our expert panel provides an advanced and practical guide to structuring IC-DISC companies, going beyond the basics to offer concrete tools to tackle more advanced issues and the challenges of structuring complex IC-DISC entities. The panel will discuss structures for C corporations, using trusts and blocker corporations as intermediaries, commission determination and grouping strategies, and specific drafting techniques.

Outline

  1. Introductory Comments
  2. Basic IC-DISC structures
  3. IC-DISC Pricing Concepts and Examples
  4. Transaction-by Transaction and Grouping Rules
  5. Marginal Costing and the Overall Profit Percentage Limitation
  6. Regular and Special No-loss Rules
  7. IC-DISC Pricing Optimization Case Study
  8. Complex Structures
    1. “Brother-sister” vs. parent-subsidiary
    2. Trusts and/or blocker corporations as intermediary structures
    3. Deferral opportunities
  9. Case Study

Benefits

The panel will discuss these and other important topics pertaining to IC-DISC structuring:

  • Understanding IC-DISC Pricing Optimization Mechanics and Documentation
  • Determining optimal IC-DISC structures for C corporations, whether closely held companies or corporations with many unrelated shareholders
  • Utilizing trusts and blockers for C corporation structures
  • Specific drafting tools for various IC-DISC structures beyond basic pass-through entity ownership of IC-DISC companies

Learning Objectives

After completing this course, you will be able to:

  • Distinguish features of more complex IC-DISC structures from basic pass-through entity IC-DISCs
  • Decide on strategies for structuring “brother-sister” C corporations in circumstances where parent-subsidiary structures are not appropriate
  • Discern when a trust structure would benefit owners of a C Corporation in designing an IC-DISC
  • Recognize additional business opportunities under the qualified export receipts definition
  • Identify best practices for structuring commission agreements

Faculty

Mark C. Gasbarra, CPA, National Managing Director
Forte International Tax, Evanston, Ill.

Mr. Gasbarra has more than thirty-five years of international tax experience serving a wide array of companies across many industries. He serves major multinational corporations and CPA firms throughout the U.S., as well as privately held businesses with international operations. He advises on a wide range of international tax matters with deep expertise in outbound issues including repatriation, foreign tax credit utilization, export incentives, including the IC-DISC, and the domestic production activities deduction. Prior to founding Forte in 2004, he was the lead partner in EY's Chicago-based International Tax Services department, and prior to that position, he was an International Tax Service Partner at PwC.

Robert J. Misey, Jr., Shareholder
Reinhart Boerner Van Deuren, Chicago & Milwaukee

Mr. Misey is attached to the firm's Tax and Business Law Practices, and chairs its International Practice. He works primarily on international taxation and tax controversies for clients in industries ranging from manufacturing to entertainment. He previously spent nine years with the IRS.


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Tax Law Advisory Board

Robert S. Barnett

Partner

Capell Barnett Matalon & Schoenfeld

William H. Byrnes

Associate Dean, Special Projects

Texas A&M University Law

Robert A.N. Cudd

Senior Partner

Polsinelli

Patrick Derdenger

Tax Partner

Steptoe & Johnson

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Principal

Cummings & Lockwood

Lynn Fowler

Partner

Kilpatrick Townsend & Stockton

Edward Froelich

Of Counsel

Morrison & Foerster

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Partner

Hinckley Allen

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Waller Lansden Dortch & Davis

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Partner

Alston & Bird

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Partner

BakerHostetler

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Partner

Smith Gambrell & Russell

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Partner, Cross-Border Transactions Tax

Fraser Milner Casgrain

Christian M. McBurney

Partner

Arent Fox

Suzanne Ross McDowell

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Alex Sadler

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Peter Stathopoulos

Managing Director, State and Local Tax Practice

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Lowndes Drosdick Doster Kantor & Reed

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