IC-DISC
Get the Most from IC-DISC Tax Benefits
Owner-managed exporting businesses can recoup - or even exceed - their tax savings by creating an interest charge-domestic international sales corporation (IC-DISC.) The IC-DISC is not a tax shelter. It provides a permanent 10-20% tax savings for qualifying U.S. exporters.
To get the most out of an IC-DISC, including maximum tax savings, businesses should seek assistance from a qualified tax advisor with significant international tax and business planning experience. Freed Maxick can tailor our services to your needs – so you can get back to business.
HOW IT WORKS
Step 1
Owner-managed exporting entity creates a tax-exempt IC-DISC
Step 2
Exporting entity pays IC-DISC a commission
Step 3
Exporting entity deducts commission from ordinary income which could be taxed at up to 39.6%
Step 4
ICDISC pays no tax on the commission
Step 5
Shareholders pay income tax on dividends at the capital gains rate of 20%
Step 6
Result is 20% tax savings on commission
IC-DISC Advantage and Benefits
- IC-DISC shareholdings can be used in a number of ways to help achieve business goals and objectives.
- Increased liquidity for shareholders or the business to redeploy in other areas
- Permanent tax savings on global sales
- Ability to leverage cost of capital
- Opportunities to create management incentives
- Means to facilitate succession or estate planning
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