Are U.S. exporters benefiting from the FSC?
Article Abstract:
By an Act of Congress in 1984, the Foreign Sales Corporation (FSC) replaced the Domestic International Sales Corporation (DISC) as a legal business entity. The reason for this restructuring was to comply with the requirements of recent foreign trade agreements and to provide a stimulus for exports from the U.S. The new FSC legislation, designed to lower the effective tax rate on income from the export of domestically manufactured goods, may be less efficient than the DISC legislation because of additional operating expenses due to the FSC's emphasis on foreign location and activities. A survey of Fortune's Top 50 Exporters, an additional 103 Fortune 500 companies with export revenues, and a random sample of 300 other exporters was conducted to gauge exporters' opinions about the new legislation. One-third of the respondents have chosen not to participate in the FSC tax incentives because they do not believe the FSC provides sufficient benefits; even those participating do not believe that FSC benefits compare favorably to those provided by DISC.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1986
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Foreign sales corporations: a great investment for IRAs
Article Abstract:
Foreign sales corporations (FSCs) allow the significant accumulation of dividends for individual retirement accounts (IRAs) invested in FSCs. This structure can generate greater nontaxable gains than IRAs that are invested in publicly trade securities. Moreover, it allows the distribution of the profit of C corporations at no immediate tax cost to shareholders. The FSC tax rules permit a corporation to allocate its income to a third party who can exclude a huge amount from being taxed. However, the tax benefit gained by an FSC shareholder that is a corporate exporter is generated not only as a result of FSC rules but also due to the deduction rules for dividends-received allowed a corporate shareholder. Those planning to take advantage of these benefits may consider hiring the services of an FSC management company.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1996
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Small business acceptance of foreign sales corporation incentives
Article Abstract:
This is the second year in which companies with export sales may elect to participate in the new tax incentives offered by the Foreign Sales Corporation legislation. Although Congress specifically included incentives aimed at the small and medium exporter in the legislation, smaller exporters are less likely to participate than larger exporters. This study examines the comparative perceptions of smaller and larger exporters regarding the export incentive legislation and offers some alternatives that may make participation by smaller exporters more attractive. (Reprinted by permission of the publisher.)
Publication Name: American Journal of Small Business
Subject: Business, general
ISSN: 0363-9428
Year: 1986
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