Article
Turn exports into tax benefits: How IC-DISCs could increase your savings
March 24, 2021 · Authored by Wakako Byer, Nick Frank
According to the United States department of agriculture (USDA), food products and agricultural commodities have been among the highest-valued exports since 2013. It’s estimated that in 2020, food exports climbed to more than $140 billion.
While the USDA report includes a diverse array of fresh, prepared, and packaged products, all of the products reflect a common trend: continued growth in global demand. With all this growth, companies that export goods are looking for ways to reduce taxable income.
To accomplish this reduction in taxable income, companies can create interest charge domestic international sales corporations (IC-DISC).
The following will be covered in our article:
- What is an IC-DISC?
- Who can benefit from forming an IC-DISC?
- How can an IC-DISC reduce an export company’s taxable income?
- How does an IC-DISC function?
- Is an IC-DISC allowed to have foreign shareholders?
- How is an IC-DISC taxed?
- How to execute an IC-DISC
- Calculate your IC-DISC tax savings
- Calculating IC-DISC commissions
- Use of IC-DISCs by cooperatives
- Factor accounts receivable through an IC-DISC
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.
