IC-DISC Case Study
ABC Co. has $2M in gross export sales and $500,000 in net income from those exports.
It will pay a commission of at least $250,000 to the IC-DISC (50% of export net income).
Results: ABC Co. pays $250,000 in deductible IC-DISC commissions, saving its shareholders $99,000 in tax (at a 39.6% tax rate). The IC-DISC pays dividends to its shareholders who pay only $50,000 in tax (using a 20% dividend rate). The net result is an annual $49,000 permanent tax reduction!
Summary: An IC-DISC offers a permanent annual decrease in tax rate on at least half of export profits. The benefits of an IC-DISC can be dramatically higher by performing a transaction-by-transaction analysis.