The Nation’s Leader in Export Tax Benefit Services

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AmCorp Management, Inc. is the Nation’s

AmCorp’s Tax Team is the Nation’s leader in Export Tax Benefits. Our

Leader in Export Tax Benefit Services

p pTax Experts sole practice is identifying and securing Corporate Export Tax Benefits.

We have one of the most experienced teams in the industry they partnerWe have one of the most experienced teams in the industry, they partner with some of the country’s leading CPA firms, Law firms, Private Equity firms and various professional financial services firms and institutions to help you not only reduce taxes but maximize cash flow.

Today we are not here to sell you anything, wewant to highlight a couple of opportunities whichmay dramatically increase you company’smay dramatically increase you company s operating capital and improve future corporateearnings.

The two export tax areas we will discuss arethe EIE and IC-DISC tax provisions.

EIE and IC-DISC Tax Provisions

What is EIE?(EIE: Extraterritorial Income Exclusion: Income Exclusions on Income from ETI)(ETI: Extra-Territorial Income: Income earned from exporting goods outside the U S )(ETI: Extra-Territorial Income: Income earned from exporting goods outside the U.S.)

The EIE are tax benefits and incentives that are available to any U.S. taxpayer that exports property that is manufactured or produced in the United States. Goods may also be manufactured outside the United yStates, with some qualifying caveats.

What is IC-DISC?What is IC-DISC?(Interest-Charge Domestic International Sales Corporation)

An IC-DISC is a domestic corporation formed to t i i t f t l Aact as a commission agent for export sales. An

IC-DISC provides huge permanent tax savings for privately held U.S. exporters by allowing a portion of the sales profits to be exempt from p p pthe corporate tax (35%) by making it subject to a Capital Gains tax of 15%.

What The Experts Say About EIE

ETI Tax Benefits“…the ETI tax regime provides permanent tax savings to those who

lif t h l k th l i t iti tqualify, taxpayers who overlook these rules may miss opportunities to reduce their tax liabilities substantially.”

- The Tax Advisor

Extraterritorial exclusion and the FTC - (foreign tax credits)“More taxpayers that export goods are reaping the tax benefits from the extraterritorial income exclusion (EIE). The EIE allows a corporation to exclude qualifying foreign trade income (FTI) from incomeexclude qualifying foreign-trade income (FTI) from income.

- USA Today

International Tax IncentivesSince Oct 1 2000 U S exporters have beenSince Oct. 1, 2000, U.S. exporters have been allowed to exclude certain export sales from federal taxable income. The tax benefit is an exclusion of 15 to 30 percent of export sales p pincome from U.S. taxation.

- Wall Street Journal

Extra-territorial Income Exclusion (EIE)

The EIE rule was signed into law on November 15, 2000. It is effective for the transactions beginning on or after October 1, 2000. The EIE rule g g ,is designed to promote exports by U.S. taxpayers. Taxpayers who export products are generally allowed an exclusion of a percentage of the income related to their exportsincome related to their exports.

Applies to U.S. C Corporations, Foreign Corporations, U.S. S Corporations partnerships and individuals The benefits are much moreCorporations, partnerships and individuals. The benefits are much more expansive than the prior Foreign Sales Corporation (“FSC”) rules.

Th EI l ll t t d i lThe EI rules allow taxpayers to amend previously filed returns to obtain any benefits available so long as the years involved are not closed under the statute of limitations (i.e., 3 years).

How The EIE Works

Income Statement Total Revenue Export RevenueGross Receipts $20,000,000 $6,600,000COGS 60% (Cost of Goods Sold) ($12,000,000) ($3,960,000)Gross Margin $8,000,000 $2,640,000SGA Expenses 50% (Sells & General Admin) $4,000,000 $1,320,000Taxable Income $4,000,000 $1,320,000Taxable Income $4,000,000 $1,320,000Overall Profit Percentage 20.00 % 20.00 %

Method of Calculating ETI Exclusion15% of FTI (F i T d I ) $198 00015% of FTI (Foreign Trade Income) $198,0001.2% of FTGR (Foreign Trade Gross Receipts) $79,200

Larger EIT Exclusion of the two methods $198,000Effective Tax Rate 35.00%

2005 Federal Income Tax Savings (Fadeout = 80% of benefit) $55,4402006 Federal Income Tax Savings (Fadeout = 60% of benefit) $41,580

“Consequently, time is ticking for U.S. exporters to claim EIE for previous tax years where qualified exports existed” - Tampa Bay Business Journal

What The Experts Say About IC-DISC

IC-DISC: Tax Benefits for Exports 2007“The IC-DISC offers an opportunity for exporters to convert ordinary i t d t 35 t t di id d i t bl t d dincome taxed at 35 percent to dividend income taxable at reduced rates.” - The Tax Advisor

Interest-Charge Domestic International Sales Corporation te est C a ge o est c te at o a Sa es Co po at oOwner-managed exporting businesses can recoup — or even exceed — their tax savings by creating an interest charge-domestic international sales corporation (IC-DISC). - CFO.com

Tax EconomicsCombined with the favorable dividend tax rules enacted under the Jobs and Growth Tax Relief Reconciliation Act of 2003, the IC-DISC now provides a permanent 20 percent tax savings for qualifying U.S. exporters.

New York Times- New York Times

What The Experts Say About IC-DISC

The IC-DISC rule was created by Congress in 1984 as a deferral benefit for exporters on the first $10M of qualified exports.

Most taxpayers opted to utilize the more beneficial FSC rule that wasMost taxpayers opted to utilize the more beneficial FSC rule that was repealed in 2000. However, Congress changed the dividend tax rate to 15% in 2003 and made the IC-DISC a very valuable export tax i ti t i t l h ld b iincentive to privately held businesses.

It applies to:Manufacturers and DistributorsEngineers and Architects who work on

projects that are located abroad even if the work is performed in the USthe work is performed in the US.

How Company Export Taxes Are PaidEIE Benefits

Shareholder owns their main company and exports its products directly to buyers out of the U.S. Borders. The Shareholder pays a 35% tax rate as normal income on therate as normal income on the earnings received from the sell of their export products.

How The IC-DISC Works

Shareholder owns their main company and exports its products directly. Shareholder creates an IC-DISC to provide exporting services through a commission agreement for goods sold outside the U.S. borders. The tax rate is now 15% from dividend income15% from dividend income instead of the 35% tax rate from normal earnings. (The existence of the IC-DISC is transparent to all customers)transparent to all customers).

How The IC-DISC Works

Income Statement Total Revenue Export RevenueGross Receipts (1/3 Export) $20,000,000 $6,600,000COGS 60% (C t f G d S ld) ($12 000 000) ($3 960 000)COGS 60% (Cost of Goods Sold) ($12,000,000) ($3,960,000)Gross Margin $8,000,000 $2,640,000SGA Expenses 50% (Sells & General Admin) $4,000,000 $1,320,000Taxable Income $4,000,000 $1,320,000Overall Profit Percentage 20.00 % 20.00 %

Method of Calculating IC-DISC Deduction50% of FTI (Foreign Trade Income) $660,000

4% of FTGR (Foreign Trade Gross Receipts) $264 0004% of FTGR (Foreign Trade Gross Receipts) $264,000Larger IC Deduction of the two methods $500,000Effective Tax Rate Without IC-DISC 35.00%Federal Income Tax Without IC-DISC $231,000Effective Tax Rate With IC-DISC 15 00%Effective Tax Rate With IC DISC 15.00%Federal Income Tax With IC-DISC $99,000

Federal Income Tax Savings $132,000

“The IC-DISC will improve cash flow for any business that has a qualifying net income from export sales” - San Francisco Chronicle

What The EIE and IC-DISC Can Do For You

EIE EIE IC-DISCIC-DISC(For Years 2005 and 2006)(For Years 2005 and 2006) (Current and Future Years)(Current and Future Years)

Provides an estimated reduction of 15 to 30% tax

Provides an estimated 50% tax

savings over standard exporter tax filings.

savings over standard exporter tax filings.

Q lif i f i t d i i Q lif i R i tQualifying foreign trade income is determined using one of the following three methods:

15% of foreign trade net income method

Qualifying Requirements

Must be a US Corporation95% of FTGR must be from export sales

1.2% of foreign trading gross receipts

from a transaction (but capped at 2X what

is earned under the income method)

95% of total assets must be qualified export assets on the close of each tax year

Timely election to be treated as IC-DISC Cannot be part of a controlled group

30% of the “foreign sales and leasing

income” from the transaction

g

(FTGR - Foreign Trade Gross Receipts)

Most Common Asked Questions

Shouldn’t I already be doing this?Not necessarily, experience shows that less than 10% of the y pcompanies that qualify actually take advantage of these exclusions and incentives. Most of those are public companies who can afford to access specialty tax services, plus it is a very complex process.

Will this cause an IRS audit?No, the IRS has defined the process for the EIE and IC-DISC procedures and when they are followed there are no problems. We have over 4,300 problem free tax clients. Plus if there ever is an issue with our work we stand behind it 100% with no cost to the client.

How do I know if I qualify?How do I know if I qualify?By allowing AmCorp to do a no-obligation, no-cost Feasibility Study on your tax filings.

Our Process

P id ith t bli ti f ibilit t dProvide you with a no-cost, no-obligation feasibility study

This will:

• Identify your EIE and IC-DISC tax savings

• Outline the processOutline the process

• Outline our pre-determined flat based fee

• Highlight your responsibilities

• Detail the timeline of the process

The Next Step

YOUSUBMIT A LETTER OF UNDERSTANDINGSUBMIT A LETTER OF UNDERSTANDINGPROVIDE COPIES OF THE FOLLOWING:

Required tax recordsContact Person

AmCorp ManagementANALYZE YOUR RECORDSPROVIDE A FEASIBILITY STUDY

Upon approval of the Feasibility Study, we will prepare a quality and IRS approvedwill prepare a quality and IRS approved filing documents for you to recover your additional tax revenue.