The Interest Charge Domestic International Sales Corporation, or IC-DISC, can be used as a tax benefit for qualifying exporters of goods produced in the U.S. The IC-DISC must be set up as a separate corporate entity and is exempt from federal income tax under Sec. 991. A company that exports goods can use the IC-DISC for up to a 50% tax deduction on its export income.
How it Works
The manufacturer (or supplier) of the exported good pays a tax-deductible commission based on foreign taxable income to the IC-DISC, which distributes that commission to its shareholders as qualified dividends. In other words, through the IC-DISC, ordinary income is converted to qualified dividend income. For example, if a manufacturer is normally taxed at a 35% corporate rate, the shareholder saves 15% in taxes by paying a qualified dividend income at 20% instead.
There are a number of complex rules on how to compute sales commission, so you will want to check with an expert to ensure you are maximizing your tax benefit. Tax Point Advisors can help you benefit from this excellent opportunity for tax savings.
To learn more about tax benefits from the IC-DISC, simply fill out the form on this page and a member of our team will be in touch with you. Or, you may call us at (800) 260-4138 nationwide.