IC-DISC | TaxConnections

23 Mar 2021

Three Significant Provisions That Impact Use Of The IC-DISC

Congress sent the Coronavirus Aid, Relief, and Economic Security Act’’ or the ‘‘CARES Act’’ to the President, who signed it into law.

There are three significant provisions that impact 2018, 2019, and 2020 income taxes and your use of the IC-DISC.

Net operating loss carrybacks. The provisions enacted as part of the Tax Cuts and Jobs Act at the end of 2017 eliminated the ability to carry back net operating losses to obtain tax refunds. The CARES Act provides for a five-year net operating loss carryback for losses generated in years beginning after December 31, 2017 and before January 1, 2021.

Written by Brian Schwam | Posted in IC-DISC

08 Dec 2020

The CARES ACT And The IC-DISC

Congress sent the Coronavirus Aid, Relief, and Economic Security Act’’ or the ‘‘CARES Act’’ to the President, who signed it into law.

There are three significant provisions that impact 2018, 2019, and 2020 income taxes and your use of the IC-DISC.

Section 461(l) delayed effective date. Section 461(l) limits the deductibility of losses for taxpayers other than corporations. The provisions, enacted as part of the Tax Cuts and Jobs Act at the end of 2017 limited the current deductibility of these losses to $500,000 for married filing jointly taxpayers ($250,000 for all others). The CARES Act delays the impact of this provision until taxable years beginning after 2020 for most taxpayers, however the provision was completely eliminated for excess farm losses.

Written by Brian Schwam | Posted in CARES ACT • IC-DISC

16 Jun 2020

The Cares Act And IC-DISC

Congress sent the Coronavirus Aid, Relief, and Economic Security Act’’ or the ‘‘CARES Act’’ to the President, who signed it into law.

There are three significant provisions that impact 2018, 2019, and 2020 income taxes and your use of the IC-DISC.

Net operating loss carrybacks. The provisions enacted as part of the Tax Cuts and Jobs Act at the end of 2017 eliminated the ability to carry back net operating losses to obtain tax refunds. The CARES Act provides for a five-year net operating loss carryback for losses generated in years beginning after December 31, 2017 and before January 1, 2021.

Section 461(l) delayed effective date. Section 461(l) limits the deductibility of losses for taxpayers other than corporations. The provisions, enacted as part of the Tax Cuts and Jobs Act at the end of 2017 limited the current deductibility of these losses to $500,000 for married filing jointly taxpayers ($250,000 for all others). The CARES Act delays the impact of this provision until taxable years beginning after 2020 for most taxpayers, however the provision was completely eliminated for excess farm losses.

Section 163(j) interest limitation. The provisions, enacted as part of the Tax Cuts and Jobs Act at the end of 2017, limited the deductibility of interest to 30 percent of modified taxable income. The CARES Act modifies this provision for tax years beginning in 2019 and 2020 and allows for the deductibility of interest to 50 percent of modified taxable income.
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Written by Brian Schwam | Posted in CARES ACT • IC-DISC

02 Apr 2020

The CARES Act And The IC-DISC

Congress sent the Coronavirus Aid, Relief, and Economic Security Act’’ or the ‘‘CARES Act’’ to the President, who signed it into law.
There are three significant provisions that impact 2018, 2019, and 2020 income taxes and your use of the IC-DISC.

Net Operating Loss Carrybacks
The provisions enacted as part of the Tax Cuts and Jobs Act at the end of 2017 eliminated the ability to carry back net operating losses to obtain tax refunds. The CARES Act provides for a five-year net operating loss carryback for losses generated in years beginning after December 31, 2017 and before January 1, 2021.

Section 461(l) Delayed Effective Date
Section 461(l) limits the deductibility of losses for taxpayers other than corporations. The provisions, enacted as part of the Tax Cuts and Jobs Act at the end of 2017 limited the current deductibility of these losses to $500,000 for married filing jointly taxpayers ($250,000 for all others). The CARES Act delays the impact of this provision until taxable years beginning after 2020 for most taxpayers, however the provision was completely eliminated for excess farm losses.

Section 163(j) Interest Limitation
The provisions, enacted as part of the Tax Cuts and Jobs Act at the end of 2017, limited the deductibility of interest to 30 percent of modified taxable income. The CARES Act modifies this provision for tax years beginning in 2019 and 2020 and allows for the deductibility of interest to 50 percent of modified taxable income.
Read More

Written by Brian Schwam | Posted in CARES ACT • IC-DISC

30 Apr 2018

IC-DISC and United States Exporting of Computer Software, Internet Sales and Licenses

These are frequently asked questions on the topic of the IC-DISC and United States Exporting of Computer Software, Internet Sales and Licenses as a major tax savings tool. We thank our member Richard Lehman for his expertise and answers to these often asked questions.

Will a customer of company that is exporting through a DISC know that there is a DISC involved in the transaction?

Answer: The existence of the DISC will be transparent to the export company’s customers. The exporter will continue to operate its business in the same manner and its employees will continue to perform the company’s manufacturing, sales, billing, shipping and collection functions. The fact that there is a commission agreement between the exporter and the DISC will not have to be disclosed to the exporter’s customers and no documentation provided to the customers will need to indicate the existence of or services deemed provided by the DISC.

Written by Richard Lehman | Posted in IC-DISC

22 Sep 2015

Watch How An IC-DISC Can Benefit Companies With Export Income

Closely held companies that export have a tax-savings opportunity by creating an Interest Charge–Domestic International Sales Corporation (IC-DISC).

The IC-DISC is a creature of the Internal Revenue Code that provides a significant tax incentive for business owners who manufacture and export. Small to mid-size businesses can set up a separate corporation that elects to be treated as an IC-DISC.

Watch Video Below:

Connect With Doug Eckert.

Written by Doug Eckert | Posted in IC-DISC

22 Sep 2015

IRS: Only 25% of Potential IC-DISC Tax Benefits Being Captured

Closely-held companies that export have a tax-savings opportunity by creating an Interest Charge – Domestic International Sales Corporation (IC-DISC). While about 6,000 small and medium businesses take advantage of the tax incentives of an IC-DISC, the IRS statistics suggest that only about 25 percent of the potential IC-DISC benefits that are available are actually being captured.