Voices: 10 winning IC-DISC tax strategies
By Robert Feinschreiber Margaret Kent
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DISC Benefits. Congress repealed the Extraterritorial income provisions, leaving interest charge DISCs as America's only viable tax break. ExportDISCs give exporters a long-term tax deferral, potentially delaying the payment of these taxes – with a modest amount of interest - for many years to come. There could very well be an ExportDISC in your future!
DISC Formation and Organization. Should your ExportDISC be subsidiary of the parent company, or should your ExportDISC be a brother-sister corporation? What are the pitfalls in making the DISC election? Should your ExportDISC be a buy-sell enterprise, a commission enterprise, or something else? What estate planning structures for your DISC should you consider for your shareholders?
DISC Gross Receipts. How can you best comply with the 95 percent gross receipts test? What sales and rental opportunities should your ExportDISC undertake? Why maximizing gross receipts might not be your best alternative? Should your ExportDISC claim related and subsidiary service activities? What about embedded services and Internet services? Is passive income the right gross receipts opportunity for your export business?
DISC Export Assets. How can you best comply with the 95 percent assets test, as your ExportDISC's assets grow? Are producer's loans the best for your ExportDISC? Wouldn't a FISC work best instead? What about using your receivables as an asset? Would you consider Related Foreign Export corporations? How can you build up eligible export assets as the company's tax deferral also grows?
DISC Pricing and Profits. How can you best select from the 4 percent gross receipts method and the 50/50 net profit method? When should you apply the transaction-by-transaction or grouping methods? When can having loss sales increase DISC profits? Why a FISC can increase DISC benefits? When does marginal costing work? When should you claim export promotion benefits?
DISC Distributions. How can you best use DISC distributions to make the most of the tax deferral? What do you need to know about accumulated DISC income, and the benefits your company will have by making accumulated DISC income grow? What should you be doing with your previously taxed income? What do you need to know about deficiency distributions?
Related Material. FSCs, extraterritorial income, transfer pricing, and more.