The Tax Deferral Afforded by an Interest-Charge DISC should be Considered by any Export Company
By Anthony Diosdi Would you like to defer the payment of income tax on a substantial portion of your export profits? An Interest-Charge Domestic International Sales Corporation (“IC DISC”) may be the answer.An IC DISC is a domestic corporation which affords the shareholder the ability to defer income taxes on a significant portion of the income attributable to qualified export sales of $10 million or less, provided the IC DISC meets strict qualifying requirements. The “cost” of obtaining this deferral is the payment of interest annually at approximately Treasury Bill rates on the shareholder’s deferred tax liability i.e., on the tax due as if the accumulated income were distributed. Thus, instead of paying tax on these profits, you are instead paying interest and, even then, at attractive rates with the…