Karen: This is PKF Texas Entrepreneur’s Playbook. I’m Karen Love, the Host and Co-founder. Today I’m here with Frank Landreneau, one of our International Tax Directors. Welcome back to the Playbook, Frank.
Frank: Great, glad to be here.
Karen: Well I’m excited that you’ve been here talking about IC-DISC and who should use it and what it is, but what I’m wondering is exactly how does it work?
Frank: Well Karen, that’s a great question because it can work in a lot of different ways. What we’ve found with our clients, the most simplistic way, is to set up something called a Commission DISC. And the way that works is that you set up an IC-DISC entity and you don’t have to disrupt any of your business operations by changing anything how you do currently.
Karen: Got it.
Frank: But the operating company will charge the IC-DISC a commission, the IC-DISC itself doesn’t pay tax but rather distributes its income to shareholders. The net effect of all that converts income that would ordinarily be taxed at regular tax rates to achieve capital gains for tax rates.
Karen: Wow, now that sounds like that works and it sounds like you know what you’re doing; very, very impressive. And so I’d like for you to come back and then maybe go into others ways that companies will deal with the life cycle of their international business.
Frank: I would love to do that. Export is usually the first step.
Karen: Wonderful, fantastic, look forward to it. For other international topics please visit PKFTexas.com/InternationalDesk. This has been another Thought Leader Production brought to you by the PKF Texas Entrepreneur’s Playbook.