1 Tax Incentive Strategy for U.S. Exporters:

Transcript:1 Tax Incentive Strategy for U.S. Exporters::
1 Tax Incentive Strategy for U.S. Exporters: Interest-Charge DISC Alabama International Trade Center Dec 11: Birmingham Business Alliance Dec 18: Mobile Area Chamber of Commerce Edward K. Dwyer, CPA & Alex McGowin, CPA Mail: P. O. Box 3057 Daphne, AL 36526 Office Address: Stonebrook Business Park 23210 US Hwy 98- Ste A-2 Fairhope, AL 36532 Phone: (251) 401-4010 E-mail: ekdwyintax@aol.com Phone: (251) 232-7115 E-mail: alexmcgowin@aol.com Today’s Speakers Edward K. Dwyer Independent CPA/Int’l Tax Consultant (1990 to present) Int’l Tax Partner, KPMG- New Orleans (1984-1990) Director of Taxes, Ocean Drilling & Exploration Co. (1973-1984) Member: AICPA, Society of Louisiana CPAs Licensed CPA: Louisiana & Alabama B.S. –Accounting, Louisiana State University-N.O. M.S.- Taxation, University of New Orleans Alex McGowin International Tax Associate, Edward K. Dwyer, CPA (August 2013 to present) International Tax Associate, PwC –Houston (August 2012-August 2013) Licensed CPA: Alabama B.S. –Finance, University of Mississippi M.S. –Tax Accounting, University of Alabama 2 2 2 Overview of Presentation Brief History & Recent Events Impact of recent laws on IC-DISCs, i.e. ATRA-rate increases, APA-Medicare tax. Overview of the IC-DISC Potential benefits of the IC-DISC with an example. Federal & State Taxation Includes Mississippi, Alabama, and Florida treatment of IC-DISC. IC-DISC Requirements This will include basic structuring of the IC-DISC and applicable qualifying tests, i.e. gross receipt and asset tests. Intercompany Pricing Rules This includes the specific methods allowable for transfer pricing between an IC-DISC and its related supplier Export Promotion Expenses Final Points 3 Tortured History of the DISC Congress enacted the domestic international sales corporation provision in 1971 in attempt to stimulate U.S. exports. GATT & WTO controversy Foreign Sales Corporation provision (1984) Extraterritorial Income Exclusion (2000) JGTRRA of 2003 reduced the maximum tax on qualified dividends Extraterritorial Income Exclusion repealed in 2004 IC-DISC (around since 1984) 4 Impact of Recent Legislation American Taxpayer Relief Act of 2012 Benefit for 2012 and prior years was simply the 20% rate differential between qualified dividends (15%) and the top rate of 35% for individuals and corporations. New top income tax bracket New legislation has added a 39.6% bracket for families making over $450,000 and a new preferred dividend rate of 20% for the same high income households. Healthcare and Reconciliation Act of 2010 IRC Section 1411: 3.8% tax on unearned income for families with MAGI in excess of $250,000. 0.9% additional Medicare tax on earned income for families with employment income in excess of