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> Information provided on this site is for general guidance only and is often simplified. Actual IRS procedures are complex, and taxpayers should obtain professional assistance or use IRS sources for complete information.


Summary Of Corporate Forms A summary of the tax characteristics of different corporate forms.

Domestic International Sales Corporation The DISC was used in conjunction with Foreign Sales Corporations, but has been reborn following 2003 legislation.

Limited Partnership Limited Partnerships are often used for investment-holding purposes, and have 'pass-through' status for domestic partners.

Limited Liability Company LLCs are treated as partnerships unless they opt to be treated as corporations.
"S" Corporation "S" Corporations have a 'pass-through' tax treatment.


Domestic International Sales Corporation

The Domestic International Sales Corporation has come back into favour after a period of disuse. The form existed until 2002 to encourage export activity by allowing tax deferral within the DISC while it was more or less exclusively engaged in export sales activity; but when the Foreign Sales Corporation regime was replaced following adverse rulings from the WTO, the DISC temporarily ceased to be of interest.

Then in 2003 the Jobs and Growth Tax Relief Reconciliation Act introduced a beneficial regime for commission-earning DISCs under which the eventual tax charge on the DISCs profits (in the hands of its shareholders) was reduced to 15%.

In order to qualify for an DISC, the US exporter must have export property that is manufactured, produced, grown or extracted in the United States by a person other than a DISC, is held primarily for sale, lease or rental for direct use, consumption or disposition outside the United States, and contains a minimum of 50% US content. These rules are subject to a 95% test.

A DISC may own a FISC (Foreign International Sales Corporation) outside the US and Puerto Rica (eg in the US Virgin Islands) which subject to transfer pricing rules can be a beneficial combination.

In order to qualify as a Domestic International Sales Corporation (DISC), a corporation needs to have only one class of stock with par value of at least USD2,500. An DISC election must have been made and not terminated.

There are complex rules governing the allocation of expenses, treatment of loss sales, treatment of interest expense, etc.

The profits of a DISC are not subject to corporate taxation (it is deferred), although income from a DISC is subject to corporate taxation in the hands of shareholders in certain circumstances:

  • Deemed distribution
  • Distribution upon disqualification
  • Income attributable to military property
  • Disposition of DISC stock
  • There was a foreign investment attributable to DISC earnings
  • Any income attributable to qualified export receipts exceeding USD10 million.

Form 8404 (Computation of Interest Charge on DISC-Related Deferred Tax Liability) must be filed to report the interest charge on a DISC. The priority of distributions is:

  • Out of previously taxed income (PTI)
  • Out of accumulated DISC income
  • Out of other E&P

This is a highly simplified account of the DISC, whose operation is closely controlled by detailed legislation.

Summary Of Corporate Forms A summary of the tax characteristics of different corporate forms.

Domestic International Sales Corporation The DISC was used in conjunction with Foreign Sales Corporations, but has been reborn following 2003 legislation.

Limited Partnership Limited Partnerships are often used for investment-holding purposes, and have 'pass-through' status for domestic partners.

Limited Liability Company LLCs are treated as partnerships unless they opt to be treated as corporations.
"S" Corporation "S" Corporations have a 'pass-through' tax treatment.

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New On The Network Today

This feed is published daily with selected new or updated content from across our network. For a list of network sites, many of which feature daily news, see below.

 
02/09 New Lowtax Editor Column, by Kitty Miv
01/09 International Privacy and Security, Investors Offshore special feature
31/08 Lowtax Belize, annual update
27/08 IRS To Drop UBS Lawsuit, Tax-News.com
26/08 New Lowtax Editor Column, by Kitty Miv
25/08 New PBTG Editor Column, Caroline, PBTG editor
24/08 Uruguay Stays On OECD Grey List, Tax-News.com
23/08 Don't Forget Doha, And I Don't Mean The Tennis, Jeremy Hetherington-Gore blog entry
20/08 Ireland Plans Social Security Overhaul, Tax-News.com
19/08 New Lowtax Editor Column, by Kitty Miv
18/08 New PBTG Editor Column, Caroline, PBTG editor
17/06 Lowtax Cayman Islands, annual update
16/08 Germany's Fiscal Court Seeks Property Tax Reform, Tax-News.com
13/08 Jurisdiction Special Focus: Antigua and Barbuda, Investors Offshore special feature
12/08 New Lowtax Editor Column, by Kitty Miv
11/08 New PBTG Editor Column, Caroline, PBTG editor
10/08 Brazil Cuts Import Tariffs, Tax-News.com
09/08 Ukraine Tax Code Published, Tax-News.com
06/08 France Plans Reform Of Property Tax Credit, Tax-News.com
04/08 New PBTG Editor Column, Caroline, PBTG editor
02/08 Islamic Finance - The New Mainstream Alternative, Investors Offshore special feature
28/07 New PBTG Editor Column, Caroline, PBTG editor
27/07 UK Launches Raft Of Tax Consultations, Tax-News.com
26/07 Fat Tax On The Menu , Jeremy Hetherington-Gore blog entry
23/07 Sarkozy Seeks 'Fiscal Convergence' With Germany, Tax-News.com
20/07 Singapore Base For Tuvalu OIFC, Tax-News.com
15/07 St Vincent & The Grenadines, Investors Offshore special feature
13/07 Tax- News.com Jersey Review 2010-2011
12/07 Goodbye To All That, Jeremy Hetherington-Gore blog entry
06/07 Hong Kong Full PBTG Guide, added to Personal Business Tax Guide
28/06 Lowtax Dubai, annual update
18/06 Singapore - Another Hong Kong?, Investors Offshore special feature
15/06 Swiss Parliament Approves UBS Agreement, Tax-News.com
08/06 Dubai Full PBTG Guide, added to Personal Business Tax Guide
04/06 Lowtax Panama, annual update
01/06 Lowtax Luxembourg, annual update
03/03 Personal Business Tax Guide, PBTG, has launched!
Providing essential tax news and information for globally mobile artists, contractors, entrepreneurs, professionals, small businesses, sportspersons and entertainers.
 

 
Lowtax Network Sites
Lowtax Network Portal: 'Low-tax' business and investment in the top 50 jurisdictions covered in exceptional detail.
Tax News: Global tax news, continuously updated through the day.
Investors Offshore: The independent offshore and alternative investment guide for expatriates and the globally aware investor. Sponsored by HSBC Bank International.
Law & Tax News: Daily news and background data on tax and legal developments for international business.
Offshore-e-com: A topical guide to offshore e-commerce focused on tax and regulation.
Lowtax Library: One of the web's largest and most authoritative business and investment information sources.
US Tax Network: The resource for free online US taxation information, covering: corporate tax, individual tax, international tax, expatriates, sales and e-commerce tax, investment tax.
NEW! Personal Business Tax Guide: Providing essential tax news and information on business for contractors, entrepreneurs, professionals, small businesses, artists, sportspersons and entertainers.
 

IMPORTANT NOTICE: THE LOWTAX NETWORK has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments. All materials on this site copyright The Lowtax Network 1999 - 2010.


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