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It’s an Interest Charge-Domestic International Sales Corporation. If your business may involve U.S. manufacturing of goods for export, you may be entitled to tax savings with an IC-DISC. The new corporation must formally elect to be treated as an IC-DISC and must also file an annual U.S. income tax return even though it pays no U.S. income taxes.

To be eligible to make an IC-DISC election, the corporation must satisfy several requirements:

• There is a single class of stock with an aggregate minimum par value of $2,500;
• 95% of gross receipts involve goods manufactured in the U.S. as described below;
• 95% of the assets of the IC-DISC is inventory for export as described below;
• The tax year conforms to that of the IC-DISC’s principal shareholder;
• Separate books and records are maintained by the IC-DISC; and
• The IC-Disc is not a member of a controlled group involving a foreign sales corporation.

The qualified gross receipts test is met if 95% or more of the gross receipts of the IC-DISC consist of commissions earned with respect to qualified export property, which is property (i) manufactured, produced, grown, or extracted in the United States by a person other than an IC-DISC; (ii) is held primarily for sale, lease, or rental for direct use, consumption, or disposition outside the United States; and (iii) not more than 50 percent of the value of which is attributable to imported materials.

The qualified export asset test is met if the IC-DISC’s tax basis (may be cost or market value) in its qualified export property (typically inventory) equals or exceeds 95% of the sum of the adjusted basis of all the assets of the IC-DISC at the close of the year.

An American exporter-parent corporation forms an IC-DISC corporation subsidiary. The operations work like this:

• The exporter-parent corporation pays an annual, tax-deductible commission on its export sales to the IC-DISC (the commission deduction could yield a tax benefit as high as 35 percent).
• The allowable commission rate is either 50 percent of export net income or 4 percent of gross export income, whichever is greater;
• The IC-DISC pays no U.S. income tax on the commission income;
• The commission income is accumulated and untaxed in the IC-DISC. The deferral of income is allowable on annual export sales up to $10 million;
• The IC-DISC shareholders are required to pay interest (to the IRS) on the accumulated but untaxed income; and
• The IC-DISC shareholders pay U.S. income tax on dividends received from the IC-DISC when distributions are made (the tax on dividends for individuals is now 15 percent).

The commissions paid to the IC-DISC create 35 percent tax benefits for the U.S. exporting corporation while the individual shareholders of the IC-DISC would pay only 15 percent U.S. income tax on dividends received. That means the permanent tax savings for U.S. exporters and their shareholders can be a high as 20 percent!

Please note, you do need legal advice regarding the process of forming a Interest Charge-Domestic International Sales Corporation and the preparation of by-laws and corporate books and other records.

For one low fee, your IC-DISC Corporation is COMPLETE and  INCLUDES FREE State Filing Fees. INCLUDES FREE Corporate Seal and Book. INCLUDES FREE Certificate or Articles of Incorporation. INCLUDES FREE Corporate Minutes. INCLUDES FREE By Laws. INCLUDES FREE Stock Certificate. INCLUDES FREE Preliminary Name Search. INCLUDES FREE IRS IC-DISC Documentation. INCLUDES FREE IC-DISC Corporate Compliance including Corporate Resolutions and Documentation. Yes, even INCLUDES Attorney's Fee (No Hidden Attorney Fees). What's the secret to such great prices? Flexible payment options available for placing your order.