One of the few tax incentives still available to manufacturers, assemblers and distributors of goods that are produced in the United States and exported for sale is the interest charge domestic international sales corporation (IC-DISC).
An IC-DISC can be used to defer recognition of income related to foreign sales or to reduce income tax liability of shareholders by “converting” ordinary income into qualified dividend income.
In one real life example, a manufacturer with annual foreign sales of just over $7,000,000 recognized a tax savings of approximately $88,500 per year through the use of an IC-DISC. And while the amount of savings that each taxpayer experiences will vary, clients will almost certainly recover the cost of organizing an IC-DISC during its first year of implementation.
For more information on foreign sales and implementing an IC-DISC, please contact John Perkins.