Our export business also has domestic sales. Does any export revenue make an IC-DISC qualify?
An IC-DISC generally must satisfy a 95% qualified-export-receipts test for its own gross receipts.
By AE Tax Advisors Team · Updated October 29, 2026
An IC-DISC generally must satisfy a 95% qualified-export-receipts test for its own gross receipts. Some export activity does not establish qualification. The operating exporter's mixed domestic sales and the IC-DISC's commission or sales receipts must be distinguished; the test is not automatically applied to every receipt of a related operating company.
A specific business-owner situation
An exporter earns both domestic and foreign sales and pays commissions to a separate IC-DISC. The preparer must determine which transactions generate qualified receipts at the IC-DISC level.
Illustrative example, not a client result.
What to establish before filing
- Identify the tested entity's gross receipts.
- Classify qualified and nonqualified receipts.
- Review any permitted qualification correction procedure.
Which fact changes the answer?
A qualifying commission IC-DISC can have a different receipt profile from its operating supplier. Entity-level classification changes the calculation.
A mistake to avoid
Do not treat every foreign-customer receipt as qualified or test the wrong entity.
Records that support the decision
- IC-DISC ledger.
- Export transaction support.
- Commission calculation and qualification workpaper.
The decision to document
Prepare an annual receipts test tied to the IC-DISC's actual books and statutory categories.
Business-owner tax planning and preparation scope · Discuss advisory scope with AE
Related questions
- We sell to a U.S. distributor that exports the goods. Does the domestic buyer automatically disqualify the sale?
- We perform engineering and general consulting for overseas projects. Are all foreign service fees qualified export receipts?
Sources and editorial context
- IRS Form 1120-IC-DISC instructions: qualification and reporting
- Section 993: qualified export receipts and property
General educational information prepared with AI assistance. No individual professional review is claimed. Apply the relevant tax-year rules to the actual records. Editorial policy · AI disclosure.