Case Study:

U.S. hi-tech manufacturer saved over $1.2 million in federal taxes with an IC-DISC.

The Issue:
A hi-tech manufacturer sold more than $70 million of specialty equipment throughout Europe and Southeast Asia in 2013. Due to the highly specialized nature of the products, as well as increasing demand in export markets, the company was highly profitable in 2013. These high profit margins would have resulted in an onerous federal tax liability of more than $4.5 million for 2013. Such a large cash outflow would be detrimental, since the cash was needed for significant plant expansion, R&D and the purchase of new capital-intense machinery.

The Solution:
Implementing an IC-DISC would significantly reduce the 2013 federal tax liability for the company. Likewise, a transaction-by-transaction optimization would further increase the federal tax savings in 2013.

Case Study:
The company implemented an IC-DISC as of January 1, 2013, and fully utilized a transaction-by-transaction optimization to maximize federal tax savings. The implementation of the IC-DISC alone saved the company $500,000 for 2013. By also utilizing a transaction-by-transaction optimization, the company saved an additional $750,000. The overall federal tax savings of $1,250,000 generated by the IC-DISC was used to fund R&D and finance much of the necessary plant expansion as well as purchase new machinery.

2013
No IC-DISC
IC-DISC/No Transaction Optimization
IC-DISC/Transaction Optimization
Federal Tax
$4,500,000
$4,000,000
$3,250,000