IC-DISC Offers a Powerful Tool to U.S. Exporters to lower Taxes

With the extension of capital gains tax rates for qualified dividends included in the Tax Relief Act of 2010, permanent tax savings result from the current tax rate differential. An IC-DISC offers a permanent tax-saving opportunity to U.S. Exporters.

What is an IC-DISC?
An Interest Charge-Domestic International Sales Corporation is a powerful export incentive that can provide permanent federal tax savings to U.S. exporters. It’s available to exporters of products and certain services that are produced in the United States and sold for ultimate use outside of the United States.

To create an IC-DISC, a new entity is formed. This entity acts as a commission agent for all qualifying exports. When the new entity makes an election to be treated as an IC-DISC, it is not subject to federal tax on its earnings. As the related supplier, your company is allowed a deduction for the IC-DISC commission that is calculated on export profits. The IC-DISC makes dividend distributions of its earnings to shareholders. These distributions are treated as qualified dividend income.

Permanent tax savings result from the deduction of the commission at ordinary income rates (35 percent), and the qualified dividend income taxed at just 15 percent, for a savings of 20 percent on the calculated commission.

For a Free Consultation call or email:
Amare Berhie, International Tax Advisor
ABA Tax Accounting
amare@abataxaccounting.com
Toll free 866-936-0430

Advertisements

The URI to TrackBack this entry is: https://abataxaccounting.wordpress.com/2011/05/05/ic-disc-offers-a-powerful-tool-to-u-s-exporters-to-lower-taxes/trackback/

RSS feed for comments on this post.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: