IC-DISC Strategies Update: Commissions, Complex Computations, IRS Audit Risks, Tax Savings Tactics

Recording of a 110-minute CPE webinar with Q&A


Conducted on Thursday, October 5, 2017

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide an updated guide to accounting professionals, tax advisers, and DISC administrators on the tax benefits and operational requirements of an Interest Charge-Domestic International Sales Corporation (IC-DISC). The panel will review and explain the key strategic steps for establishing and running an IC-DISC, including calculating commissions, spotting IRS audit risks, and tackling the complex computations required. The panel will also address recent IC-DISC developments and outline key IC-DISC tax planning opportunities, including using the optimal DISC ownership structure to maximize DISC benefits.

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 underutilized. Tax advisers must be well-versed in the tax, accounting and operational requirements after implementing IC-DISCs.

Establishing and operating an IC-DISC requires comprehensive tax planning to ensure that the DISC is meeting the IRS tests for determining qualified export assets and receipts and for ensuring distribution and interest amounts are accurately calculated. DISCs can achieve optimal tax benefits by utilizing available safe harbor pricing methods. Advisers must also grasp the impact of the DISC’s ownership and entity structure in claiming tax benefits.

Listen as our panel of expert advisers, drawing from years of experience in IC-DISC structures, helps you deal with its tax challenges, including calculating commissions, anticipating IRS audit risk areas, improving liquidity for the parent and shareholders, and identifying optimal approaches to the computational requirements. The program will provide tools to help ease the integration of DISC structures into current financial reporting systems.

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Outline

  1. IC-DISC overview
    1. Applicable IRC sections
    2. Tax court decisions and IRS guidance
    3. Implementing an IC-DISC
    4. IC-DISCs’ future
  2. Updated IC-DISC ownership structures
    1. Structuring and implementing IC-DISCs
    2. Day-to-day operating issues
    3. IRA ownership of IC-DISCs
    4. Treaty country ownership of DISC
    5. Related party DISC partnerships
    6. Enhanced tax deferral opportunities
    7. Saving disqualified IC-DISCs
  3. Compliance and reporting
    1. Pricing rules
    2. Computational challenges
      1. Calculating commissions
      2. Transaction-by-transaction computations
      3. Reg § 1.861-8 computations
      4. Other issues
    3. Challenges related to the dividend tax increase and 3.8% Medicare tax
    4. Tax filings and common compliance pitfalls

Benefits

The panel will guide you through issues, including:

  • Maximizing unique IC-DISC tax benefits, including the tax benefits from different shareholder structures
  • Understanding tax liability for IC-DISC structures under the new federal dividend tax rate and Medicare tax
  • Improving liquidity for the parent and shareholders—steps to consider
  • Overcoming computational challenges

Faculty

Gasbarra, Mark
Mark C. Gasbarra, CPA

National Managing Director
Forte International Tax

Mr. Gasbarra has more than thirty-five years of international tax experience serving a wide array of companies across...  |  Read More

Block, Neal
Neal J. Block

Senior Counsel
Baker & McKenzie

Mr. Block has represented U.S. and international corporate clients on domestic and international tax matters for...  |  Read More

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$247