Form 1120-IC-DISC 1120-IC-DISC, Interest Charge Domestic International Sal

Form

1120-IC-DISC

Interest Charge Domestic International
Sales Corporation Return

(Rev. December 2008)

©

Department of the Treasury
Internal Revenue Service

See separate instructions.
(Please type or print.)

For calendar year 20_____, or tax year beginning
A Date of IC-DISC election

B Business activity code no.
(See instructions.)

OMB No. 1545-0938

, 20_____, and ending

, 20_____.

Name

C Employer identification number

Number, street, and room or suite no. (or P.O. box if mail is not delivered to street address)

D Date incorporated

City or town, state, and ZIP code

E Total assets (see instructions)

$

F

Check applicable box(es): (1)

Initial return (2)

Final return (3)

Name change (4)

Address change (5)

Amended return

G(1) Did any corporation, individual, partnership, trust, or estate own, directly or indirectly, 50% or more of the
IC-DISC’s voting stock at the end of the IC-DISC’s tax year? (See section 267(c) for rules of attribution.)
If “Yes,” complete the following schedule. (If a foreign owner, see instructions.)
Identifying
number

Name

Voting
stock
owned

Address

Total assets
(corporations only)

Yes

No

Foreign
owner

Yes

No

%
%
(2) Enter the following for any corporation listed in G(1) that will report the IC-DISC’s income:
Tax year of first corporation
IRS Service Center where return will be filed
Tax year of second corporation

IRS Service Center where return will be filed

H(1) Check the appropriate box(es) to indicate any intercompany pricing rules that were applied to 25% or more of gross
income (line 1 below):
50-50 combined taxable income method
4% gross receipts method
Section 482 method (“arm’s length pricing”)
(2) Check here
if the marginal costing rules under section 994(b)(2) were applied in figuring the combined taxable income
for any transactions.

All Computations Must Reflect Intercompany Pricing Rules If Used (Section 994)
See separate Schedule P (Form 1120-IC-DISC).
Taxable Income
1
2
3
4

Gross income. Enter amount from Schedule B, line 4, column (e)
Cost of goods sold from Schedule A, line 8
Total income. Subtract line 2 from line 1
Deductions. Enter amount from Schedule E, line 3
Taxable income before net operating loss deduction and dividends-received deduction. Subtract line
4 from line 3
6a
6a Net operating loss deduction (attach schedule)
6b
b Dividends-received deduction from Schedule C, line 9
c Add lines 6a and 6b
7 Taxable income. Subtract line 6c from line 5
8 Refundable credit for federal tax paid on fuels (attach Form 4136)

1
2
3
4
5

Sign
Here

5

6c
7
8

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true,
correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

Paid
Preparer’s
Use Only

©

Signature of officer
Preparer’s
signature

Date

©

Firm’s name (or
yours if self-employed),
address, and ZIP code

Date

©

For Privacy Act and Paperwork Reduction Act Notice, see instructions.

Title
Preparer’s SSN or PTIN

Check if
self-employed
EIN
Phone no.

Cat. No. 11473P

Form

(

)

1120-IC-DISC

(Rev. 12-2008)

Form 1120-IC-DISC (Rev. 12-2008)

Schedule A

Page

2

Cost of Goods Sold (see instructions)
If the intercompany pricing rules of section 994 are used, reflect actual purchases from a related supplier at
the transfer price determined under such rules. See separate Schedule P (Form 1120-IC-DISC).

1
2
3
4
5
6
7
8
9a

b
c
d
e
f

1
Inventory at beginning of the year
2
Purchases
3
Cost of labor
4
Additional section 263A costs (attach schedule)
5
Other costs (attach schedule)
6
Total. Add lines 1 through 5
7
Inventory at end of the year
8
Cost of goods sold. Subtract line 7 from line 6. Enter here and on line 2, page 1
Check all methods used for valuing closing inventory: (i)
Cost as described in Regulations section 1.471-3
(ii)
Lower of cost or market as described in Regulations section 1.471-4
(iii)
Other (Specify method used and attach explanation.) ©
©
Check if there was a writedown of “subnormal” goods as described in Regulations section 1.471-2(c)
©
Check if the LIFO inventory method was adopted this tax year for any goods. (If checked, attach Form 970.)
If the LIFO inventory method was used for this tax year, enter percentage (or amounts) of closing
9d
inventory computed under LIFO
If property is produced or acquired for resale, do the rules of section 263A apply to the corporation?
Yes
Yes
Was there any change in determining quantities, cost, or valuations between the opening and closing inventory? (If “Yes,” attach explanation.)

Schedule B

No
No

Gross Income (see instructions)
(a) Type of receipts

Commission sales
(b) Gross receipts
(c) Commission

(d) Other
receipts

(e) Total (add
columns (c) and (d))

1

Qualified export receipts from sale of export property—
a To unrelated purchasers:
(i) Direct foreign sales
(ii) Foreign sales through a related foreign entity
(iii) Persons in the United States (other than
an unrelated IC-DISC)
(iv) An unrelated IC-DISC
b To related purchasers:
(i) Direct foreign sales
(ii) Persons in the United States
c Total
2 Other qualified export receipts:
a Leasing or renting of export property
b Services related and subsidiary to a qualified
export sale or lease
c Engineering and architectural services
d Export management services
e Qualified dividends (Schedule C, line 15)
f Interest on producer’s loans
g Other interest (attach schedule)
h Capital gain net income (attach Schedule D
(Form 1120))
i Net gain or (loss) from Part II, Form 4797
(attach Form 4797)
j Other (attach schedule)
k Total
3 Nonqualified gross receipts:
a Ultimate use in United States
b Exports subsidized by the U.S. Government
c Certain direct or indirect sales or leases for
use by the U.S. Government
d Sales to other IC-DISCs in the same
controlled group
e Nonqualified dividends (Schedule C, line 16)
f Other (attach schedule)
g Total
4 Total. Add lines 1c, 2k, 3g, column (e). Enter here and on line 1, page 1
Form

1120-IC-DISC

(Rev. 12-2008)

Form 1120-IC-DISC (Rev. 12-2008)

Schedule C

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

3

Dividends and Dividends-Received Deduction (see instructions)

Dividends from less-than-20%-owned domestic corporations (other than
debt-financed stock)
Dividends from 20%-or-more-owned domestic corporations (other than
debt-financed stock)
Dividends on debt-financed stock of domestic and foreign corporations
(section 246A)
Dividends on certain preferred stock of less-than-20%-owned public utilities
Dividends on certain preferred stock of 20%-or-more-owned public utilities
Dividends from less-than-20%-owned foreign corporations
Dividends from 20%-or-more-owned foreign corporations
Dividends from wholly owned foreign subsidiaries (section 245(b))
Total. Add lines 1 through 8. See instructions for limitation
Dividends from foreign corporations not included on lines 3, 6, 7, or 8
Income from controlled foreign corporations under subpart F
(attach Form(s) 5471)
IC-DISC and former DISC dividends not included on lines 1, 2, or 3
(section 246(d))
Other dividends
Total dividends. Add lines 1 through 13, column (a)
Qualified dividends. Enter here and on Schedule B, line 2e, column (d)
Nonqualified dividends. Subtract line 15 from line 14. Enter here and on
Schedule B, line 3e, column (d)

Schedule E

Page

(a) Dividends
received

(b) %

(c) Dividends–received
deduction:
((a) 3 (b))

70
80
see
instructions

42
48
70
80
100

Deductions (Before completing, see Limitations on Deductions in the instructions.)

1
a
b
c
d
e
f
g
h
i
j
k
l
m

Export promotion expenses:
Market studies
Advertising
Depreciation (attach Form 4562)
Salaries and wages
Rents
Sales commissions
Warehousing
Freight (excluding insurance)
Compensation of officers
Repairs and maintenance
Pension, profit-sharing, etc., plans
Employee benefit programs
Other (list):

n
2
a
b
c
d
e
f
g

Total. Add lines 1a through 1m
Other expenses not deducted on line 1:
Bad debts
Taxes and licenses
Interest
Contributions
Freight
Freight insurance
Other (list):

1a
1b
1c
1d
1e
1f
1g
1h
1i
1j
1k
1l
1m
1n
2a
2b
2c
2d
2e
2f
2g
2h
3

h Total. Add lines 2a through 2g
3 Total deductions. Add lines 1n and 2h. Enter here and on line 4, page 1
Form

1120-IC-DISC

(Rev. 12-2008)

Form 1120-IC-DISC (Rev. 12-2008)

Schedule J

Page

4

Deemed and Actual Distributions and Deferred DISC Income for the Tax Year
Part I—Deemed Distributions Under Section 995(b)(1) (see instructions)

1
2
3
4
5
6
7
8
9
10
11

Gross interest derived during the tax year from producer’s loans (section 995(b)(1)(A))
Gain recognized on the sale or exchange of section 995(b)(1)(B) property (attach schedule)
Gain recognized on the sale or exchange of section 995(b)(1)(C) property (attach schedule)
50% of taxable income attributable to military property (section 995(b)(1)(D)) (attach schedule)
Taxable income from line 7, Part II, below
Taxable income of the IC-DISC (from line 7, page 1)
Add lines 1 through 5
Subtract line 7 from line 6
If you have shareholders that are C corporations, enter one-seventeenth of line 8 (.0588235 times
line 8)
International boycott income (see instructions)
Illegal bribes and other payments

1
2
3
4
5
6
7
8
9
10
11

Note: Separate computations for lines 12–23 are required for shareholders that are C corporations
and shareholders that are not C corporations. Complete lines 12, 14, 15, 17a, 18, 20, and 22
for shareholders that are not C corporations. Complete lines 13, 14, 16, 17b, 19, 21, and 23 for
shareholders that are C corporations.

12
13
14
15
16
17
a
b
18
19
20
21
22
23
24

Add lines 7, 10, and 11
Add lines 7, 9, 10, and 11
Earnings and profits for the tax year (attach schedule)
Enter the smaller of line 12 or 14
Enter the smaller of line 13 or 14
Foreign investment attributable to producer’s loans (attach schedule):
For shareholders other than C corporations
For shareholders that are C corporations
Add lines 15 and 17a
Add lines 16 and 17b
Enter percentage of stock owned by shareholders other than C corporations
Enter percentage of stock owned by shareholders that are C corporations
Multiply line 18 by line 20 (Allocate to shareholders other than C corporations)
Multiply line 19 by line 21 (Allocate to C corporation shareholders)
Total deemed distributions under section 995(b)(1) for all shareholders. Add lines 22 and 23
Part II—Section 995(b)(1)(E) Taxable Income (see instructions)

1
2
3
4
5
6

Total qualified export receipts (see instructions)
Statutory maximum
Controlled group member’s portion of the statutory maximum
Enter smaller of (a) 1 or (b) number of days in tax year divided by 365 (or 366) (see instructions)
Proration. Multiply line 2 or 3, whichever is applicable, by line 4
Excess qualified export receipts. Subtract line 5 from line 1. (If line 5 exceeds line 1, enter -0here and on line 7 below.)
Taxable income attributable to line 6 receipts. Enter here and on line 5 of Part I above
Part III—Deemed Distributions Under Section 995(b)(2) (see instructions)

7

12
13
14
15
16
17a
17b
18
19
20
21
22
23
24
1
2
3
4
5

$10,000,000

6
7

1
2
3

Annual installment of distribution attributable to revocation of election in an earlier year
Annual installment of distribution attributable to not qualifying as a DISC or IC-DISC in an earlier year
Total deemed distributions under section 995(b)(2). Add lines 1 and 2
Part IV—Actual Distributions (see instructions)

1
2
3

1
2
3
4
a
b
c
d

Distributions to meet qualification requirements under section 992(c) (attach computation)
Other actual distributions
Total. Add lines 1 and 2
Amount on line 3 treated as distributed from:
4a
Previously taxed income
4b
Accumulated IC-DISC income (including IC-DISC income of the current year)
4c
Other earnings and profits
Other
4d
Part V—Deferred DISC Income Under Section 995(f)(3) (see instructions)

1
2
3

1
2
3

Accumulated IC-DISC income (for periods after 1984) at end of computation year
Distributions-in-excess-of-income for the tax year following the computation year to which line 1 applies
Deferred DISC income under section 995(f)(3). Subtract line 2 from line 1

1
2
3

Form

%
%

1120-IC-DISC

(Rev. 12-2008)

Form 1120-IC-DISC (Rev. 12-2008)

Liabilities and
Shareholders’ Equity

Assets

Schedule L

Page

Balance Sheets per Books

(a) Beginning of tax year

1 Qualified export assets:
a Working capital (cash and necessary temporary investments)
b Funds awaiting investment (cash in U.S. banks in excess of working capital
needs) in other qualified export assets
c Export-Import Bank obligations
d Trade receivables (accounts and notes receivable)
Less allowance for bad debts
e Export property (net) (including inventory and qualified property held for lease)
f Producer’s loans
g Investment in related foreign export corporations
h Depreciable assets
Less accumulated depreciation
i Other (attach schedule)
2 Nonqualified assets (net) (list):
3 Total assets. Combine lines 1a through 2
4
5
6
7
8
9
10
11
12
13
14
15

Accounts payable
Other current liabilities (attach schedule)
Mortgages, notes, bonds payable in 1 year or more
Other liabilities (attach schedule)
Capital stock
Additional paid-in capital
Other earnings and profits
Previously taxed income (section 996(f)(2))
Accumulated pre-1985 DISC income (see instructions)
Accumulated IC-DISC income (see instructions)
Less cost of treasury stock
Total liabilities and shareholders’ equity

Schedule M-1

(

) (

)

(

) (

)

(

) (

)

Reconciliation of Income per Books With Income per Return

1 Net income (loss) per books
2 Excess of capital losses over capital gains
3 Taxable income not recorded on
books this year (itemize):
4 Expenses recorded on books this year
and not deducted on this return (itemize):
5 Add lines 1 through 4

Schedule M-2

6 Income recorded on books this year not
included on this return (itemize):
7 Deductions on this return not charged
against book income this year (itemize):
8 Add lines 6 and 7
9 Income (line 5, page 1)—line 5 less line 8

Analysis of Other Earnings and Profits (Line 10, Schedule L)

1 Balance at beginning of year
2 Increases (itemize):

5 Distributions to qualify under section 992(c)
6 Other decreases (itemize):

3 Add lines 1 and 2
4 Deficit in earnings and profits

7 Add lines 4 through 6
8 Balance at end of year (line 3 less line 7)

Schedule M-3

Analysis of Previously Taxed Income (Line 11, Schedule L)

1 Balance at beginning of year
2 Deemed distributions under section 995(b)
3 Other increases (itemize):

5 Deficit in earnings and profits
6 Distributions to qualify under section 992(c)
7 Other decreases (itemize):

4 Add lines 1 through 3

8 Add lines 5 through 7
9 Balance at end of year (line 4 less line 8)

Schedule M-4

5

(b) End of tax year

Analysis of Accumulated IC-DISC Income (Line 13, Schedule L)

1 Balance at beginning of year
2 Increases (itemize):
3 Add lines 1 and 2
4 Deficit in earnings and profits
5 Redemptions under section 996(d)

6 Distributions to qualify under section 992(c)
7 Distributions upon disqualification (sec. 995(b)(2))
8 Other decreases (itemize):
9 Add lines 4 through 8
10 Balance at end of year (line 3 less line 9)
Form

1120-IC-DISC

(Rev. 12-2008)

Form 1120-IC-DISC (Rev. 12-2008)

Schedule N
1

Page

6

Export Gross Receipts of the IC-DISC and Related U.S. Persons (see instructions)

See page 16 of the instructions and enter the product code and percentage of total export gross receipts for (a) the largest
and (b) 2nd largest product or service sold or provided by the IC-DISC:
%
%
(a) Code
Percentage of total
(b) Code
Percentage of total
Export gross receipts for the current tax year
Export gross receipts of related U.S. persons

2

(a) Export gross receipts of the IC-DISC

3

(b) Related IC-DISCs

(c) All other related U.S. persons

If item 2(b) or 2(c) is completed, complete the following (if more space is needed, attach a schedule following the format below):
(a) IC-DISCs in Your Controlled Group
Name

Address

Identifying number

(b) All Other Related U.S. Persons in Your Controlled Group
Name

Schedule O

Address

Identifying number

Other Information (see instructions)
Yes No

1
a
2a
b
c
3
4
5

See page 15 of the instructions and enter the main:
b Product or service ©
Business activity ©
Did 95% or more of the IC-DISC’s gross receipts for the tax year consist of qualified export receipts (defined in
section 993(a))?
Did the adjusted basis of the IC-DISC’s qualified export assets (as defined in section 993(b)) at the end of the tax
year equal or exceed 95% of the sum of the adjusted basis of all the IC-DISC’s assets at the end of the tax year?
If a or b is “No,” did the IC-DISC make a pro rata distribution of property as defined in section 992(c)?
Did the IC-DISC have more than one class of stock at any time during the tax year?
Was the par or stated value of the IC-DISC’s stock at least $2,500 on each day of the tax year (for a new
corporation, this means on the last day for making an election to be an IC-DISC and for each later day)?
Did the IC-DISC keep separate books and records?

6a Does the IC-DISC or any member of the IC-DISC’s controlled group (as defined in section 993(a)(3)) have operations
in or related to any country (or with the government, a company, or a national of that country) associated with
carrying out the boycott of Israel that is on the list kept by the Secretary of the Treasury under section 999(a)(3)?
b Did the IC-DISC or any member of the controlled group of which the IC-DISC is a member have operations in
any unlisted country that the IC-DISC knows or has reason to know requires participation in or cooperation with
an international boycott against Israel?
c Did the IC-DISC or any member of the controlled group of which the IC-DISC is a member have operations in
any country that the IC-DISC knows or has reason to know requires participation in or cooperation with an
international boycott other than the boycott of Israel?
If the answer to any of the questions in 6 is “Yes,” see instructions and Form 5713, International Boycott Report.
7

Enter the amount of tax-exempt interest income received or accrued during the tax year © $

Note: If the IC-DISC, at any time during the tax year, had assets or operated a business in a foreign country or
U.S. possession, it may be required to attach Schedule N (Form 1120), Foreign Operations of U.S. Corporations,
to this return. See Schedule N for details.
Form

1120-IC-DISC

(Rev. 12-2008)