Taxes with an IC-DISC Help Save for Exporters and others
If your business exports American-made goods or performs architectural or engineering services for foreign construction projects. Then an interest-charge domestic international sales corporation (IC-DISC) can help slash your taxes.
An IC-DISC is a “paper” corporation you set up to receive commissions on export sales. This is up to the greater of 50% of net income or 4% of gross receipts from qualified exports. Your business deducts the commission payments, while distributions received from the IC-DISC are treated as qualified dividends, not capital gains.
Essentially, an IC-DISC allows you to convert ordinary income taxed at rates as high as 39.6% into dividends. These are taxed at 15% or 20%. An IC-DISC also allows you to defer taxes on up to $10 million in commissions. These are held by the IC-DISC by paying a modest interest charge to the IRS.
Think an IC-DISC might be right for you? Contact us for more information.