The Program 2005

Home of the Structured IC-DISC

A Program designed for Closely Held Large and Smaller Exporters,

Using IC-DISCs owned by non-corporate shareholders.

The essence of a "Structured IC-DISC" is to maximize the pass through features of IC-DISCs that were greatly enhanced by the 2003 Tax Act. While the better known, and more controversial concepts, such as FSCs and ETI, were repealed in 2004, the IC-DISC has quietly risen in prominence to become even more valuable to Closely Held Exporters than the repealed and phased out concepts.

Whether by design or chance, Closely Held Exporters, formed as Pass Through Entities, are now in a position to enjoy benefits not otherwise available to Publicly Held Exporters.

The benefit is based on the structure of the IC-DISC Shareholders, not the Exporter.  Shareholders may be structured in any way “other” than as a Corporation,  so that  IC-DISC Dividends will be taxed at the personal tax level.

Basic Comparison Between Structures: w/IC-D & w/o IC-D

A) Pass Through Exporters S Corp.; LLC; Partnership; Sole Proprietor (Exporter 35% / Shareholder 15% )
B) Corporate Exporter & Corporate Shareholder
(Exporter 39% / Shareholder 39% )
 

A) Example: $100,000 Qualified Export Trade Income.

ETI- May not be used w/IC-DISC*

      US Tax US Tax
      w/IC-D* w/0 IC-D
    Taxable ETI    
  2004 85% 25,000 29,750
  2005 88% 25,000 30,800
  2006 91% 25,000 31,850
  2007 100% 25,000 35,000
 
B) Example: $100,000 Qualified Export Trade Income.
      US Tax US Tax
      w/IC-D w/0 IC-D
    Taxable ETI    
  2004 85% 27,000 33,150
  2005 88% 27,000 34,320
  2006 91% 27,000 35,490
  2007 100% 27,000 39,000
C) Conclusion
 
1
 Very little difference in benefits between a C and Non C exporteras long as the IC-DISC has non C Shareholders.
   
2
 No benefit to Parent - Subsidiary Exporters because the income deduction and the dividend income would be offset at the same tax rate.
An IC-DISC, as originally enacted, was meant to defer taxes at an interest rate of about 5%, not to save taxes. Hence, we now have a 1971 concept, as revised in 1984, available as a viable concept. Since, the concept does not involve tax deferral, the $10 Million sales limit does not apply.

The bottom line is that IC-DISCs, now represent the most advantageous Tax Structure ever available to Closely Held Pass Through Exporters, regardless of , FSCs or ETI.

The Export Subsidy Company