Increase Cash Flow. Strategic tax planning can lead to significant opportunities.

Benefit From an IC-DISC
If you’re a U.S. company with foreign sales, one tax savings strategy is to set up an Interest Charge-Domestic International Sales Corporation (IC-DISC). It requires the formation of a new corporation, which elects to be treated as an IC-DISC. 

This export tax incentive allows U.S. manufacturing and distribution companies with foreign sales to reduce their overall tax liability by calculating a commission payment to the IC-DISC which is not subject to federal tax. The IC-DISC pays this commission to its shareholders as a qualified dividend.   

An IC-DISC tax structure creates the opportunity to tax a portion of export-related profits at lower tax rates and to potentially defer export-related income to future tax years. Companies with at least $2 million of foreign earned revenue from a product or service that is made primarily in the U.S. are prime candidates for establishing an IC-DISC.

Requirements of an IC-DISC
To qualify for the IC-DISC benefit, export sales must meet the following requirements:

• Export property must be manufactured in the U.S.
• Export property must be sold for direct use outside the U.S.
• Less than 50% of the export property’s sales price is attributable to imported materials

The following transactions may also qualify for the IC-DISC:

• Leasing U.S. manufactured property for use outside of the U.S.
• Export sales of property that is extracted, produced or grown in the U.S., including crops and livestock
• Engineering and architectural services provided for construction projects located outside the U.S.

Partner with Eide Bailly to Maximize Your Tax Savings 
Eide Bailly’s International Tax team is experienced with international tax rules and regulations. Our experienced advisors work side by side with clients to determine if their company qualifies for an IC-DISC and to establish the proper structure once the requirements are met.  

Ready to start increasing your tax savings with an IC-DISC? 
Partner with a trusted firm to help you benefit from tax credits and deductions. Complete the form to get started today.