IC-DISC Strategies: Mastering the Complex Operational Challenges

Anticipating IRS Audit Risks, Calculating Commissions, and Tackling Computational Intricacies

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


Conducted on Thursday, November 10, 2016

Recorded event now available

or call 1-800-926-7926
Program Materials

This CPE webinar will prepare accounting professional, tax advisors, and DISC administrators to understand the requirements of Discs and to better leverage their tax benefits. The panel will review and explain the key strategic steps for day-to-day aspects of running an IC-DISC, including calculating commissions, spotting IRS audit risks and tackling the complex computations required. The panel will also outline key IC-DISC tax planning opportunities, including using the best DISC ownership structures to maximize DISC benefits.

Description

The tax savings available for exporters through an IC-DISC remain a significant incentive for businesses and their owners. Accounting professionals and corporate tax specialists have to be ready for the tough tax and accounting requirements that come into play after implementing IC-DISCs.

Tax planning involving an IC-DISC requires more intensive review due to the possibility of increased tax benefits from different safe harbor pricing methods and ownership structures. Whether distributions are subject to the 3.8% Medicare surtax should also be kept in mind. These considerations add to higher-level review challenges for advisers to businesses with respect to the tax incentives from the DISC provisions in the Internal Revenue Code.

Perspectives from advisers with years of experience in IC-DISC structures will help 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. Ease in integrating the DISC structures into current financial reporting systems will be stressed.

Listen as our panel of veteran advisers takes you beyond the basic understanding of how IC-DISCs operate and prepares you to tackle the more advanced issues and challenges.

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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

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

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

Randall Janiczek, CPA
Randall Janiczek, CPA
Plante & Moran

Mr. Janiczek is a Member of the firm’s International Tax Services Group. He has extensive experience working...  |  Read More

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