IC-DISC Services

IC-DISC Services

Print Divider Print Divider Branding

An Interest Charge Domestic International Sales Corporation, or IC-DISC, provides a permanent tax savings opportunity for qualifying U.S. exporters. An IC-DISC is not a tax shelter, but creates permanent tax savings by transferring income from the exporter to the tax exempt IC-DISC through an export sales commission. At LBMC/McGuire Sponsel, our approach is designed to minimize the filing and maintenance burdens for our clients while maximizing commissions and tax savings.

How does an IC-DISC work?

The IC-DISC commission payment reduces the exporter’s taxable income, thus reducing tax liability by the marginal tax rate of the commission amount. An IC-DISC commission is taxed at the qualified dividends rate only when distributed to shareholders as dividends. The transfer of income to the IC-DISC creates a permanent tax rate arbitrage on the export sales commission of 15 to 18 percent.

Benefits of an IC-DISC

Beyond tax reduction, an IC-DISC can be used to:

  • Increase liquidity for shareholders or businesses.
  • Supply ongoing financing to reduce cost of capital. An IC-DISC is not required to distribute all commission income to shareholders. In some cases, income can be loaned back to the exporter creating tax deferment and working capital.
  • Create management and employee incentives for IC-DISC shareholders.
  • Create a tax-advantaged vehicle for succession or estate planning. Income can be transferred to the IC-DISC tax free and then distributed in a tax-advantaged manner to shareholders. The distribution can provide funding for buyouts, or create a vehicle to transfer wealth at reduced effective tax rates.
  • Eliminate double taxation for C-Corporations and defer taxes.

Team

Leaders

Other Members