IC-DISC

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IC-DISC

Interest Charge Domestic International Sales Corporation. An S-corporation, closely-held C-corporation or limited liability company in the United States that exports to non-U.S.-based clients. IC-DISCs are eligible for favorable tax treatment.
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Taxpayers can also use IC-DISCs to defer the recognition of income related to foreign sales; however, this item focuses primarily on using IC-DISCs to reduce the income tax liability of a corporation's shareholders by converting ordinary income into qualified dividend income.
State taxation is less certain, with approximately hall Of the states following the federal tax treatment and the remainder taxing IC-DISCs.
Under both methods, shareholders of CFCs or IC-DISCs must convert some of the income earned in a boycotting country into a "deemed distribution," thereby subjecting the earnings to U.
IC-DISCs do not need the typical corporate "substance" requirements--most IC-DISCs are "paper" entities and are not required to perform substantial economic functions nor have employees and office space.
IC-DISCs are generally smaller that FSCs because they are limited to $10 million in qualifying export receipts.
The guide educates the examiners on the relevant Code sections, related regulations, and cases regarding IC-DISCs.
1 percent of IC-DISCs were majority-owned by individuals, partnerships, trusts, estates, or S corporations; 11.
Under both the international boycott factor and specifically attributable methods, shareholders of CFCs or IC-DISCs must convert some of the earnings of the CFC or IC-DISC into a "deemed distribution," thereby subjecting the earnings to U.
in the tax law includes the 50 states, the District of Columbia, Puerto Rico and, for IC-DISCs, possessions.
This election is considered to be in effect as long as the IC-DISC meets the following requirements: (1) at least 95 percent of the IC-DISC's total receipts are qualified export receipts; and (2) at least 95 percent of the adjusted basis of the IC-DISCs total assets are qualified assets.
These corporations include FSCs, IC-DISCs, S corporations, electing S corporations, personal service corporations, controlled foreign corporations (CFCs), personal CFCs, certain tax-exempt organizations, possessions corporations, certain cooperative associations and certain corporations with required tax years.
A small portion of the IC-DISCs income is deemed distributed to the shareholder.