The following information is a Web Extra from the pages of Top Producer. It corresponds with the article "When Disaster Strikes." You can find the article in Top Producer’s February 2014 issue.
Here are links to articles and resources to help you understand IC-DISCs — Interest-Charge Domestic International Sales Corporations:
Setting up and operating an interest charge domestic international sales corporation (IC-DISC) can reduce the tax rate on qualifying export sales by up to 20 percentage points. An IC-DISC's tax-savings power is derived from the current 15% tax rate on qualified dividends. Businesses that could benefit include companies that earn significant income from exporting goods, including software, or from engineering or architectural services on foreign construction projects. If your company falls into one of these categories, you should consider creating an IC-DISC sooner rather than later because, without additional Congressional action, this tax rate applies only through 2012.
While over 6000 small and medium businesses take advantage of the tax incentives of the IC-DISC, thousands more that are eligible are failing to do so.
IRS Form 1120-IC-DISC, Interest Charge Domestic International Sales Corporation Return
- March 2014