Instructions for Form 1120-IC-DISC - Internal Revenue Service (2024)

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Instructions for Form 1120-IC-DISC (Rev. December 2012) Interest Charge Domestic International Sales Corporation Return Section references are to the Internal Revenue Code unless otherwise noted. Contents Page General Instructions .............1 Purpose of Form ...............1 Who Must File ................1 When To File .................2 Where To File .................2 Who Must Sign ................2 Other Forms and Statements That May Be Required ...........2 Assembling the Return ...........2 Accounting Methods ............2 Accounting Periods .............3 Rounding Off To Whole Dollars .....3 Recordkeeping ................3 Definitions ...................3 Penalties ....................4 Specific Instructions .............4 Schedule A ..................5 Schedule B ..................6 Schedule C ..................7 Schedule E ..................9 Schedule J ................. 10 Schedule K ................. 12 Schedule L ................. 12 Schedule N ................. 12 Schedule O ................. 13 Schedule P ................. 13 What's New Under Schedule O, Other Information, we have added Question 8 to request Form 5472 reporting information regarding foreign ownership of the IC-DISC. Future Developments For the latest information about developments related to Form 1120– IC-DISC, and its instructions, such as legislation enacted after they were published, go to www.irs.gov/ form1120icdisc. General Instructions Purpose of Form Form 1120-IC-DISC is an information return filed by interest charge domestic international sales corporations (IC-DISCs), former DISCs, and former IC-DISCs. What Is an IC-DISC? An IC-DISC is a domestic corporation that has elected to be an IC-DISC and its election is still in effect. The IC-DISC election is made by filing Form 4876-A, Election To Be Treated as an Interest Charge DISC. Generally, an IC-DISC is not taxed on its income. Shareholders of an IC-DISC are taxed on its income when the income is actually (or deemed) distributed. In addition, section 995(f) imposes an interest charge on shareholders for their share of DISC-related deferred tax liability. See Form 8404, Interest Charge on DISC-Related Deferred Tax Liability, for details. To be an IC-DISC, a corporation must be organized under the laws of a state or the District of Columbia and meet the following tests. At least 95% of its gross receipts during the tax year are qualified export receipts. At the end of the tax year, the adjusted basis of its qualified export assets is at least 95% of the sum of the adjusted basis of all of its assets. It has only one class of stock, and its outstanding stock has a par or stated value of at least $2,500 on each day of the tax year (or, for a new corporation, on the last day to elect IC-DISC status for the year and on each later day). It maintains separate books and records. It is not a member of any controlled group of which a foreign sales corporation (FSC) is a member. Its tax year must conform to the tax year of the principal shareholder who has the highest percentage of voting power. If two or more shareholders have the highest percentage of voting power, the IC-DISC must elect a tax year that conforms to that of any one of the principal shareholders. See section 441(h) and its regulations for more information. Its election to be treated as an IC-DISC is in effect for the tax year. See Definitions on page 3 and section 992 and related regulations for details. Distribution to meet qualification requirements. An IC-DISC that does not meet the gross receipts test or qualified export asset test during the tax year will still be Nov 30, 2012 Cat. No. 11476W Department of the Treasury Internal Revenue Service considered to have met them if, after the tax year ends, the IC-DISC makes a pro rata property distribution to its shareholders and specifies at the time that this is a distribution to meet the qualification requirements. If the IC-DISC did not meet the gross receipts test, the distribution equals the part of its taxable income attributable to gross receipts that are not qualified export gross receipts. If it did not meet the qualified export asset test, the distribution equals the fair market value of the assets that are not qualified export assets on the last day of the tax year. If the IC-DISC did not meet either test, the distribution equals the sum of both amounts. Regulations section 1.992-3 explains how to figure the distribution. Interest on late distribution. If the IC-DISC makes a distribution after Form 1120-IC-DISC is due, interest must be paid to the United States Treasury. The interest charge is 4 1 2% of the distribution times the number of tax years that begin after the tax year to which the distribution relates until the date the IC-DISC made the distribution. If the IC-DISC must pay this interest, send the payment to the Internal Revenue Service Center where you filed Form 1120-IC-DISC within 30 days of making the distribution. On the payment, write the IC-DISC's name, address, and employer identification number; the tax year; and a statement that the payment represents the interest charge under Regulations section 1.992-3(c)(4). Who Must File The corporation must file Form 1120-IC-DISC if it elected, by filing Form 4876-A, to be treated as an IC-DISC and its election is in effect for the tax year. If the corporation is a former DISC or former IC-DISC, it must file Form 1120-IC-DISC in addition to any other return required. A former DISC is a corporation that was a DISC on or before December 31, 1984, but failed to qualify as a DISC after December 31, 1984, or did not elect to be an IC-DISC after 1984; and at the beginning of the current tax year, it had

Page 2 and 3: undistributed income that was previ
Page 4 and 5: stated maturity date no more than 5
Page 6 and 7: For IC-DISCs that have elected the
Page 8 and 9: Preferred stock described in sectio
Page 10 and 11: Contributions. See the Instructions
Page 12 and 13: To avoid double counting of the dee
Page 14 and 15: Form 1120-IC-DISC Codes for Princip