HANS DRAKE IC DISC OUTLINE (DOMESTIC INTERNATIONAL SALES CORPORATION)

1. OWNERS OF IC DISC

2. INTERNATIONAL SALES

3. COMMISSION CALCULATIONS

4. 4% OF INTERNATIONAL SALES

5. TAX BENEFITS (35% OF COMMISSIONS)

6. LOANS

7. TRANSFER PRICING

8. FACTORING

9. COMPENSATION

10. ESTATE PALNNING

11. CALIFORNIA

HANS DRAKE IC DISC

SHAREHOLDERS

COMMISIONS

HANS DRAKEIC DISC

LOANS

HANS DRAKE IC DISC CALCULATIONS

YEAR 2,011 2,012 2,013 6 MOS

SALES 2,721,838 6,000,000 13,000,000 6,500,000

NET INCOME 128,812 283,952 615,230 307,615

INTER SALES 85% 2,313,562 5,100,000 11,050,000 5,525,000

INTER CTI 85% 109,490 241,359 522,945 261,473

SALES 4% 92,542 204,000 442,000 221,000

CTI (50%) 54,745 120,680 261,473 130,736

FED TAX BENEFIT 32,390 71,400 154,700 77,350

YEARS 2012 AND 2013 ESTIMATED

NET INCOME RATIO 4.7% PER 2011 TAX RETURN

4876-AFormOMB No. 1545-0190

Election To Be Treated as anInterest Charge DISC(Rev. December 2009)

Department of the TreasuryInternal Revenue Service

The corporation named below elects to be treated as an interest charge domestic international sales corporation(IC-DISC) for income tax purposes. All of the corporation’s shareholders must consent to this election.

Name of corporation Employer identification number

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

City or town, state, and ZIP code

D Name of person who may be called forinformation: (optional)C Tax year of IC-DISC: Must use tax year of shareholder (or shareholder group) with the highest

percentage of voting power (see instructions). Enter ending month and day �

F Date corporation began doing businessE Election is to take effect for the tax year beginning(month, day, year)

Telephone number:

( )H

Name and address (including ZIP code) of each shareholder (or expectedshareholder) at the beginning of the tax year the election takes effect and whenthe election is filed.

GNumber of shares of stock held on—

I Identifying number(see instructions)

(Complete both columns for each shareholder.)Date consent

is madeFirst day of year

of election

1

2

3

4

5

6

7

8

9

10

Total. Enter total shares for all shareholders (include shares of shareholders listed onany attachments)Under penalties of perjury, I declare that the corporation named above has authorized me to make this election for the corporation to be treated as an IC-DISC andthat the statements made are to the best of my knowledge and belief true, correct, and complete.

Signature and Title of Officer � Date ,

Shareholders’ Consent Statement. Part II may be used instead of attachments. For this election to be valid, eachshareholder must sign and date below or attach a separate consent to this form (see instructions).

We, the undersigned shareholders, consent to the election of the corporation named above to be treated as an IC-DISC. Our consent is irrevocable and is bindingupon all transferees of our shares in this corporation.

Signature of shareholder and date. (If consent involves transferred shares, attach a schedule showing the name and address of the holder of the shares at thebeginning of the tax year and the number of shares for which the consent is made.)

61

72

83

94

105

For Paperwork Reduction Act Notice, see page 2. Form 4876-A (Rev. 12-2009)

Part I

Part II

A

Cat. No. 62075X

Page 2Form 4876-A (Rev. 12-2009)

General InstructionsSection references are to the Internal RevenueCode unless otherwise noted.

Ineligible organizations. S corporations, certainfinancial institutions, and other corporationslisted in section 992(d) are not eligible forIC-DISC treatment.

Paperwork Reduction Act Notice. We ask forthe information on this form to carry out theInternal Revenue laws of the United States. Youare required to give us the information. We needit to ensure that you are complying with theselaws and to allow us to figure and collect theright amount of tax.

The executor or administrator should sign foran estate, and the trustee should sign for a trust.If the estate or trust has more than oneexecutor, administrator, or trustee, any of themwho is authorized to file the returns may sign theconsent. For a corporation or partnership, anofficer or partner who is authorized to sign theother returns may sign the consent for theIC-DISC election.

When To File

The time needed to complete and file thisform will vary depending on individualcircumstances. The estimated average time is:A foreign person’s consent may be signed by

any individual who would be authorized to sign ifthe person were a U.S. person.

Recordkeeping 4 hr., 4 min.Learning about the lawor the form 1 hr., 5 min.Extension. Normally, the consents must be

attached to Form 4876-A. If you establishreasonable cause for not filing a consent ontime, you may file the consent within anextended period granted by an Internal RevenueService Center. File the consents with the sameservice center where you filed Form 4876-A.

For the election to be valid, all of thecorporation’s shareholders, as of the first day ofthe tax year the election is to take effect, mustconsent to it.

Preparing and sendingthe form to the IRS 1 hr., 12 min.

If you have comments concerning theaccuracy of these time estimates or suggestionsfor making this form simpler, we would be happyto hear from you. You can write to the InternalRevenue Service, Tax Products CoordinatingCommittee, SE:W:CAR:MP:T:T:SP, 1111Constitution Ave. NW, IR-6526, Washington,D.C. 20224. Do not send the form to thisaddress. Instead, see Where To File above.

Where To File

Consent by transferee shareholder. If sharesare transferred before a consent is filed, thetransferee shareholder may consent to theIC-DISC election as long as the transfer occursand the consent is filed within the first 90 daysof the tax year. The service center may grant an

Specific InstructionsPart IAddress. Include the suite, room, or other unitnumber after the street address. If the post officedoes not deliver mail to the street address andthe corporation has a P.O. box, show the boxnumber instead.

Purpose of Form

Item B—Principal business classification. Usethe list of Codes for Principal Business Activity inthe Instructions for Form 1120-IC-DISC to enterthe corporation’s business code number,principal business activity, and principal productor service.

Separate statement. Any shareholder who doesnot sign the consent in Part II of Form 4876-Amust sign a separate consent statement for theelection to be valid. The statement must say: “I,(shareholder’s name), a shareholder of(corporation’s name), consent to the election of(corporation’s name) to be treated as anIC-DISC. The consent so made by me isirrevocable and is binding on all transferees ofmy shares in (corporation’s name).”

Once the election is made, it remains in effectuntil terminated or revoked. See Regulationssection 1.992-2(e). The election applies to eachshareholder who owns stock in the corporationwhile the election is in effect.

What Is an IC-DISC? Item C—Tax year change. If a corporationelecting to be an IC-DISC has to change its taxyear to meet the tax year requirements ofsection 441(h), the corporation generally doesnot need IRS consent to make the change. A taxyear change by a shareholder requires IRSconsent. A subsequent change by thecorporation to meet the tax year requirements ofsection 441(h) may require IRS consent. Seesection 442 and the regulations under sections441, 442, and 921 for more information. Also seeRev. Proc. 2002-37, 2002-22 I.R.B. 1030, andRev. Proc. 2002-39, 2002-22 I.R.B. 1046, asclarified and modified by Notice 2002-72,2002-46 I.R.B. 843.

An IC-DISC is a domestic corporation that meetscertain conditions regarding its organization andinternational sales and that elects to be treatedas an IC-DISC. The corporation must beorganized under the laws of a state or theDistrict of Columbia and meet the followingtests:

In addition, the statement must show (a) the names, addresses, and identificationnumbers of both the corporation and theshareholder; (b) the number of shares theshareholder owned (or expects to own) at thebeginning of the tax year the election takeseffect; and (c) the number of shares theshareholder owns when making the consent.

● At least 95% of its gross receipts during thetax year are qualified export receipts.● At the end of the tax year, the adjusted basisof its qualified export assets is at least 95% ofthe sum of the adjusted basis of all its assets.

For transferred stock, also show the nameand address of the person who held the sharesat the beginning of the tax year and the numberof shares to which this consent applies.

Column I—Identifying number. The identifyingnumber for an individual is the social securitynumber. For all others, it is the employeridentification number.

● It has only one class of stock, and itsoutstanding stock has a par or stated value of atleast $2,500 on each day of the tax year (or, fora new corporation, on the last day to electIC-DISC status for the year and on each laterday). Signature. Form 4876-A must be signed by the

president, vice president, treasurer, assistanttreasurer, chief accounting officer, or otherofficer (such as tax officer) authorized to sign forthe corporation.

Supplemental Form 4876-A. If, between thedate the election is filed and the date it takeseffect, the corporation issues more shares ofstock or the share ownership changes, it mustfile a supplemental Form 4876-A, with“SUPPLEMENTAL” written across the top of theform. The form must be filed within the first 90days of the tax year the election takes effect.

● It keeps separate books and records.

Part II

● Its tax year must conform to the tax year ofthe shareholder (or shareholder group) who hasthe highest percentage of voting power. If two ormore shareholders (or shareholder groups) havethe same highest percentage of voting power,the IC-DISC’s tax year may be the same as thatof any such shareholder (or group). See section441(h) and its regulations for more information.

On the supplemental form, include all theinformation from the earlier form except for thelist of owners contained in Parts I and II. Reportonly the owners of the new or additional sharesin Part I, and in Part II obtain their consents only.Each new shareholder or holder of additionalshares must consent to the IC-DISC election forthe Supplemental Form 4876-A to be valid.

Shareholders’ Consent Statement. An electionfor IC-DISC treatment will be valid only if allshareholders sign either the consent statementin Part II or a separate statement as describedbelow. Several shareholders may combine theirconsents in one statement.

● Its election to be treated as an IC-DISC is ineffect for the tax year.

If a husband and wife jointly own the stock orthe income from it, both must sign the consent.If tenants in common, joint tenants, or tenants bythe entirety own the stock, each person mustsign. The legal guardian should sign for a minor;if none has been appointed, the natural guardianshould sign.

See section 992 and its regulations for details.Also see section 993 and its regulations fordefinitions of qualified export receipts andqualified export assets.

A corporation files Form 4876-A to elect to betreated as an interest charge domesticinternational sales corporation (IC-DISC).

If it is the corporation’s first tax year, completeand file Form 4876-A within 90 days after thebeginning of the tax year. For any tax year thatis not the corporation’s first tax year, the electionmust be made during the 90-day periodimmediately preceding the first day of that taxyear.

File Form 4876-A with the IRS Service Centerwhere the corporation will file its annual return,Form 1120-IC-DISC, Interest Charge DomesticInternational Sales Corporation Return.

You are not required to provide theinformation requested on a form that is subjectto the Paperwork Reduction Act unless the formdisplays a valid OMB control number. Books orrecords relating to a form or its instructions mustbe retained as long as their contents maybecome material in the administration of anyInternal Revenue law. Generally, tax returns andreturn information are confidential, as requiredby section 6103.

extension beyond that date. If the transfer takesplace more than 90 days after the tax yearbegan, an extension can be granted only if thetransferor was eligible for one.

T ka gni ad av n egat of IC-DI CS Opp ro t nu eiti s

IC-D SI C rts a et gy

• retfa rieht esaercni nac seinapmoc tsoM - yb wolf hsac xat

gnitaroprocni na CI -DIS .C

• CI eht ,noisulcxe ITE fo laeper retfA - ylno eht si CSIDnoitpo elbaliava ot niatbo ex trop at x feneb i st —IC-DIS C

sah detsixe ecnis eht s07' dna ton neeb degnellahc ybstruoc ro OTW .

• CI - etar xat %51 eht fo egatnavda sekat erutcurts CSIDno .sdnedivid

IC-D SI C rts a et gy

redloherahS Own de C( ro S corp aro ti no )

REDLOHERAHS

RETROPXE

s iD v di ne d

xE port aS les

Custo em r

xE port aS l se

Custo em r

yaP ment

CI -D SI C

Serv ci e s Serv ci se

RETROPXE

Com im ssion Paym ne t

CI -D SI C S re vic se

REDLOHERAHS

iD v di e dn

Com im ssion

CI - ID SC eb n fe sti

ngieroF gnidart ssorg stpiecer 10 00, 0, 00 0 tsoC fo sdoog dlos ,8( 000, 000 ) ssorG nigraM 0,2 00 ,000

,gnilleS g larene dna evitartsinimda stsoc ( 05,1 0 0, 00) tropxE selas ten emocni ,005 000

CI - CSID noissimmoc retaerg( :)fo

%05 fo tropxe ten emocni 052 , 00 0%4 fo tropxe ssorg stpiecer 004 ,000

CI - CSID noissimmoc 4 00,00 0 laredeF xat sgnivas )%53( 041 , 00 0

CI - CSID dnediviD 004 , 00 0 laredeF xat tsoc %02( 1) 08( , 000 )

CI - CSID ten xat sgnivas 60, 00 0 htlaeH erac xat oc u dl esuac eht etar ot esaercni yb ;%8.3 dna if rp o recud itne ty is a lf“ ow throu ”hg tax eb ne tif wo lu d op te itn ally in rc esae na oth re 4.6 .%1

STNIOP REHTO SNOC FO I TARED I NO DRAGER I GN EHT TNETOP IA L XAT ETAR FENEB I ST

GNIDNEPED NOPU ATS EHT T EHT E OC SGNIVAS XAT ETATS UL D EB IFINGIS CAN .T ,REHTRUF P SI TI O ELBISS TH ECILPPA EB TON YAM %8.3 FO XAT ERAC HTLAEH AMABO A ELB D EPE N GNID U NOP EHT OWNERS P ITRA C ALU R

CIRC MU TS ANC .E TI SI OSLA TNATROPMI OT HT ETON AT IH EHT G TSEH %6.93 SI SLAUDIVIDNI ROF ETAR OS T FI H E P RECUDOR FO

TROPXE YTREPORP UORHT WOLF A SI G YTITNE H NEHT SESOPRUP XAT ROF TH LAITNETOP E NEB E TIF SI ALM TSOA %02 ETAR EFFID R LAITNE .

ID SC is exe mpt rf mo i ocn em tax • A DISC si exe tpm on t only orf m eht r aluge r

proc o tar e ocni me tax ub t a sl o si exempt orf m t ehm ini mum xat on xat erp ef er nces a dn th ea ucc m lu ated ea nr ings t xa .

Q lau i iyf ng sa a CSID • oT auq yfil a s a ID SC rof a at x raey eht co taropr noi tsum

teem lla fo eht gniwollof stnemeriuqer rof taht ta x raey : 1. eB an le i ig b el c ro p ro ita no 2. eB an actual oc pr o ar tion

q g p 4. eM et the qu la if dei e px o tr ssa te s et st 5. Have one ssalc of ts ock 6. aM ke a mit le y cele it on

nac CSID A .7 CSF a htiw puorg dellortnoc a fo rebmem a eb ton

3. eM et the qu la if dei or ss er c pie st test

The es co aropr t oi ns nnac to eb DI sCS

• detaert eb ot elbigile ton era snoitaroproc gniwollof ehT

sa a :CSID

1. xaT tpmexe aroproc t noi 2. lanosreP gnidloh seinapmoc 3. sknaB dna tsurt seinapmoc 4. ecnarusnI seinapmoc

g p ( ) 6. S snoitaroproc

i

5. detalugeR tnemtsevni seinapmoc lautum( )sdnuf

No ser tr ci noit on who can be a ID SC cots kh lo der

• CSID a eb nac ohw no snoitcirtser on sniatnoc wal ehT

edlohkcots r. CSID ts o sredlohkc nac :edulcni

ni stnaneT nommoCtnioJ stnaneT

stnaneT yb eht yteritnEroniM

ngieroF nosreP

noitaroproC pihsrentraP

etatsE tsurT

dnabsuH dna Wi ef

y y

A autc l co aropr t oi n

• fo swal eht rednu detaroprocni eb tsum noitaroproc ehT

a tats e a( ny tats e) or eht tcirtsiD fo .aibmuloC

• a fo noitaroprocni etarapes ehT yb deriuqer si CSID,etutats tub siht seod ton etatissecen ni a ll ot eh r ser ep stc

eht pes etara pihsnoitaler s hcihw esiwrehto dluow tsixeneewteb a tnerap noitaroproc dna i st sbus i yraid .

p

Q lau i deif rg o ss rec pie ts et st

• tA le sa t 95% fo t eh co opr r ta i ’no s gr so s er cei tp s

rof ht e tax ey ar m tsu oc nsi ts fo lauq ified xe op r tiecer p st .

Q lau i deif pxe ort asset et st

• T eh da j detsu bas si of the q lau fi ied e ropx t sa se st

of eht oc r tarop i no ta eht c ol se fo t eh t xa yea rm tsu eb ta le sa t 95% fo the us m of eht da uj ste d

sisab fo a ll essa ts of eht oc r tarop i no ta eht lc os eof eht xat raey .

O en alc ss fo ots kc

• T eh c ro p aro it no m su t ah ve lno y one c al ss fo

st co k, and t eh rap ro sta et d eulav fo i sttstuo a dn ing ots ck must be at tsael $2, 05 0 o nhcae day fo eht xat raey .

Ma gnik t mi yle le ce ti no to eb ert at de as DI CS

• T eh oc r tarop ion m tsu make a time yl cele t noi ot

eb tr ae et d sa a CSID dna t tah ele c it no mu ts eb i neffe tc of r eht t xa ye ra .

W neh ot ele ct • F ro a c ropro a it o s’n if tsr at x ey a ,r el ce t w ihti n 9 0

syad tfa er eht begi gninn fo the raey .

• F ro a yn other ye ra , el tce rud ing the 09 yad rep io dsuj t b fe ro e eht f sri t yad of the y rae ht e cele ti no si t opa ply.

How to el ce t • T eh oc r tarop ion if el s F ro m 84 76-A w hti t eh s ivre ec

nec ter with w cih h ti w dluo file na i cn mo e at x r te ru nif it w ere us bj tce ot income t xa . C no s stne of eac h

srep on w oh is a hs ohera l ed r sa of eht eb ginn ni g o feht fi sr t t xa raey rof w hcih eht ele c oit n si ef cef t vi eera to eb ro ta at hc de ot t eh f ro .m

ID SC ac nitnuoc g m ohte ds

• A CSID yllareneg yam esoohc yna elbissimrep dohtem of ca c uo n nit g.

• tuB fi a CSID si a rebmem fo a dellortnoc uorg p ti am y not ch oo se adohtem fo gnitnuocca hcihw dluow tluser ni a lairetam sid noitrot fo ehtemocni fo eht CSID ro yna rehto rebmem fo ht e con rt o ell d uorg p.

• esehT era selpmaxe fo tahw SRI sredisnoc a lairetam dis oitrot n o fin emoc : – laitnatsbus a ni tnega noissimmoc a sa stca dna sisab hsac eht sesu CSID a

emulov fo selas fo treporp y by a detaler noitaroproc w hcih si no eht urcca a lsisab dna w hcih liramotsuc a owt naht erom CSID eht ot snoissimmoc s

shtnom retfa eht .selas – ytreporp fo tnuoma laitnatsbus a sesael dna sisab laurcca eht sesu CSID a

morf a detaler noitaroproc no eht hsac ,sisab dna eht ID CS cu ts oma lir y seurcca na y trap fo eht tner erom naht two shtnom erofeb tner eht is diap .

p y y

D SI C ca c nitnuo g p doire s

• ehT xat raey fo a CSID tsum eb eht t xa y rae fo taht

redloherahs ro( puorg fo sredloherahs htiw eht emas 21 - htnom xat )raey ohw sah eht tsehgih egatnecrep fo

gnitov .rewop

• fI owt ro erom redloherahs s ro( puorg fo )sredloherahsevah eht tsehgih egatnecrep fo gnitov rewop rednu ehtevoba ,elur eht xat raey fo eht CSID si eht emas 21 -htnom doirep sa taht fo yna us ch redloherahs ro(

gr uo p).

IC-D SI C rts a et gy noitaluclaC fo CI - CSID mmoc i ss i no i emocn

• CI - CSID elba ot etaluclac noissimmoc emocni rednu eht iwollof n g

sdohtem revehcihw( si :)retaerg

‒ %4 fo ssorg er ec ipts m dohte

noissimmoC tonnac deecxe mus fo %4 fo deifilauq pxe o tr stpiecer fo CI - CSID sulp %01 fo tropxe noitomorp nepxe s se

- %05 fo denibmoc elbaxat emocni dohtem

noissimmoC tonnac deecxe %05 fo eht denibmoc elbaxat emocni fo ppus reil dna CI - CSID sulp 1 %0 of xe op tr

noitomorp sesnepxe

‒ CI - s'CSID elbaxat emocni desab no eht lautca elas s ,ecirp ejbus ct ot stnemtsujda rednu CRI 284§

IC-D SI C rts a et gy snoitacifilauQ

• deifilauQ" ra "stpieceR tropxE e ecer i stp orf m las es xe fo trop rp trepo y

taht era am n derutcafu i n eht SU ht yb e eilppus r na d los d of r rid ect noitpmusnoc ro psid o oitis n edistuo eht ,SU ro a ot n ep detalernu r nos yreviled rof o distu e ht e U n htiw S o eht fo %05 naht erom F VM of eht

ytreporp gnieb lbatubirtta e t o tra i lc se im detrop in ot the SU .

p p ot tcudorp be detropxe i ns ’t a n tropxe elas .

• deifilauQ" tropxE "stessA edulcni R/A nisira g tuo fo selas i n w cih h ht e CI - CSID si the apicnirp l ag ,tne ,yenom knab ped o ,stis dna dorp u rec ' s

naol s. A s'recudorp aol n is a ol a o n f an IC- s'CSID etalumucca d at x forp derrefed i ot kcab st i .S.U st tnerap irutcafunam ng napmoc y. T ehtnuoma naol ecxe tonnac ed ht e tnuoma fo ht e rrob o s'rew a ss ets

detaler ot sti selas tropxe .

• treporp fo elas A y i rof rerutcafunam naciremA na ot n oc r rop a i noit n a

E tropx pr repo ty as lauq i if ed tropxe ass te s

• tropxE eht fo eerht lla steem hcihw ytreporp yna si ytreporp

gniwollof stset : .1 ehT ytreporp tsum eb erutcafunam d, ,decudorp rg o nw o r

etcartxe d ni eht SU yb a pe nosr rehto naht a D SI C.

.2 ehT ytreporp tsum eb dleh rof las e, el ase ro er nt la , in th eyranidro c esruo fo edart ro ssenisub ,yb ro to, a CSID rof

tcerid ,esu snoc u noitpm ro noitisopsid edistuo eht .SU

.3 toN erom naht %05 of eht riaf tekram eulav of t eh p or per yt ac n eb irtta b elbatu ot selcitra detropmi ni eht SU .

W eh t reh pr epo tr y is he dl for e ropx t

• ehT noitanitsed tset rof( ,esu ,.cte tuo s edi eht )SU si

yllareneg deredisnoc deifsitas :fi

1. ehT CSID sreviled eht ytreporp ot a rrac ei r ro rf ie thgredrawrof rof yreviled edistuo eht ,SU r ge ra ld sse o f

eht BOF po tni ro ecalp fo egassap fo tit el , w rehteh ot aSU dna resahcrup ngierof ro hw rehte of u r es of eht

resahcrup ro rof ;elaser or

2. ehT elas si ot na u detalern CSID rof hcus a rup op ,esrehtehw yreviled edam eb ot si in t eh U S ro ta a

ngierof ,noitanitsed or

Q ifil pxe d ort i t l d i t ht

fo ht e rp o ytrep edistuo the .SU

sihT lcni u sed stpiecer morf lbus e nisa g.

rehtehW desael ytreporp deifsitas ht e gasu e tset si to b edenimreted no a raey - ot - ey ar .sisab

,suhT the stpiecer no a sael e fo tropxe ytreporp thgim yfilauq niemos sraey dna n to ni srehto gnidneped no ht e le ess e s’ su e o f

ytreporp ni eht raey .devlovni

tuB a de suminim esu fo eht ytreporp ni ht e SU is ep r issim ble.

R ,latne etc. of xe op tr porp er yt

• ilauQ eif d t stpiecer edulcni ssorg stpiecer f mor eht

gnisael ro er n lat of tropxe ytreporp cihw h si desu yb eht eessel

•

•

•

•

p p y g

S secivre er l ta ed ot t eh as sel dna le esaof expo tr eporp ytr

• Q ilau fied e opx tr r ce eipts ni cl edu rg o ss re ec tpi s fo r

s vre i sec w cih h ra e ob th 1( ) r tale ed and 2( ) b idi l h l l

ot reh id s isop tion of export p repor ty by ht ec pro o tar i no .

• S cu h s re v ci se m ya eb p re f ro m de iw ht in ro withou tthe .SU

• T eh CSID ne de ton esti lf rep f ro m the res civ se .

su s d ary ot yna as ,e xe c egna , l ae s ,e tner a or

S secivre er l ta ed ot t eh as sel dna le esaof expo tr eporp ytr

E max pl l i i d

– ytnarraW

– ecnanetniaM

– riapeR

– noitallatsnI

– a ropsnarT ,no u cn gn ,ecnarusni vorp e s cost si dedulcni ni eht elas ecirp ro ,latner ,ro fi yletarapess p si ,detat sti ro CSID eht yb dia p picnir .la

• E se of rel eta d ivres sec i ncl du :e

T t it i l id i di d ti t

p

E gn i reen i gn or a cr tcetih u lar vres i ec s

• deifilauQ tropxe stpiecer edulcni ssorg stpiecer rof

gnireenigne ro larutcetihcra secivres rof noitcurtsnocstcejorp detacol ro( desoporp f ro )noitacol edistuo eht

SU .

• esehT secivres edulcni ytilibisaef seiduts dna ,ngisedgnireenigne dna noitcurtsnoc .noisivrepus

• yehT od ton edulcni eht orp iv nois fo inhcet c laecnatsissa ro wonk - woh ro secivres detcennoc htiw ehtnoitarolpxe rof .lio

Q lau i deif xe port as es ts defined

• :gniwollof eht edulcni stessa tropxe deifilauQ

1. pxE o tr p or pe tr y 2. pxE o tr rp ope ytr asse st 3. Acc nuo ts r iece av lb ,e etc. 4. T me porary i vn emtse tn s of wo kr gni ca ip tal 5. orP duc re s’ ol ans 6. otS kc or uces ri it se in a r le a et d of gier n e px o tr oc pr or ita no 7. pxE o tr -Im op rt Bank and Fo gier n rC e id t I usn ar cn e

As aicos t oi n ob il gat oi sn 8. pxE ort las es f ni a cn e o agilb it o sn 9. T me porary b na k dep stiso in SU

IC-D SI C rts a et gy noitarepO fo CI - SID C

• ehT o pihsrenw fo eht CI - CSID seod on t evah ot rorrim eht pihsrenwo

fo eht .reilppus roF ,elpmaxe ylno eno redloherahs ni a C-Corp. taht sah 02 redloherahs s dluoc esoohc ot nwo eht CI - CSID

• /eeyolpmE s sredloherah c dluo esoohc ot ecuder rieht yralas morf C-proC dna esaercni dnedivid morf IC- CSID

• noissimmoC tnemeerga neewteb s reilppu dna CI - CSID um st ebdetucexe tiw h ecnatsissa morf lesnuoC

• etarapeS knab ca c tnuo dna skoob dna er c sdro tsum eb deniatniam

• launnA laicnanif stnemetats S/I( & )S/B tsum be rp epa der

• hsaC stnemyap tsum eb edam morf reilppus ot CI - CSID ausrup nt oteht noissimmoc tnemeerga

T eh IC-DI CS B ifene t

• An IC- ID SC may ca t sa eit reh a buy- lles ro

oc mm si si no -ba es d e tn it .y • In e hti er cas ,e ht e ni come fo an CI -D SI C si

c ucla la et d rednu o en of eht lof low gni : – 4% fo q lau i if ed ex rop t er cei stp , – 05 % of oc m enib d axat ble i ocn me, ro – Ar 'm s gnel th am nuo t d ete rm deni u redn ht e

p picnir sel fo edoC noitces .284

G sor s eR piec st teM hod

• ehT deifilauq ssorg cer pie st

dohtem setacolla 4 tnecrep fo

eht deifilauq tropxe stpiecer

morf tropxe selas ot eht IC-

D SI C. • sihT dohtem si desu w neh n te

snigram era ssel naht 8

.tnecrep

elpmaxE ssorG stpiecer 000,000,01$ tsoC fo oog ds 000,000,6

ssorG nigram 000,000,4 tceridnI sesnepxe 000,052,3

teN emocni 57 0 0, 00

ssorG stpieceR dohteM 04 0 0, 00 ITC dohteM 000,573

CI - CSID ocnI me 004 , 000

ITC M ohte d

• ehT denibmoc at x elba emocni

dohtem setacolla 05 p tnecre fo

eht elbaxat emocni morf xe p tro

selas ot eht CI - CSID • sihT dohtem si desu w neh net

snigram era retaerg naht 8

.tnecrep

elpmaxE ssorG stpiecer 01$ ,000, 00 0 tsoC fo oog ds 000,000,6 ssorG nigram 000,000,4

tceridnI sesnepxe 000,000,3 teN emocni 000,000,1

ssorG stpieceR dohteM 000,004 ITC dohteM 000,005

CI - CSID ocnI me 000,005

C edo Se 4 .c 82 M ohte d

• As a res lu t of li im det tca iv ti sei dna f tcnu oi sn ,

ed t re im ning the CI - CSID s i ocn me su i gn ht etra sn f re pricing p nir ci elp s un red C do e S .ce 84 2

neg er la yl luser ts in ol w re cni ome aht n u redn ehtrehto t ow m dohte .s

Ma ix mizi gn ht e IC-DI CS Co mm issi on

• An xe port re nac esu any fo the meth sdo ot a eihc v e

t eh erg ta tse IC- CSID ni c emo . • CI - ID SC rul se p re m ti ht e esu fo fid fe ner t met doh s

g p p , y ro tr eda u ,egas ro by art nsa noitc .

• W reh e t eh net pre-tax margi sn fo xe rop t s ela s ra eol w re ht an w dlro w edi ten pre-t xa margi sn , eht

ropxe t re m ya u es m lanigra tsoc ni g of oc m nib de t bl i t t IC - .emocni CSID

to ffid erent org u s desab on ro cud t l eni s i dn rtsu y

xa a e n oc me to compute I

G nipuor g

• G puor i sgn m tsu noc f ro m ot

ocer g zin ed ind rtsu y su ag ero SI /C N IA CS oc d se .

• May use r uo ni g f ro on edorp uct li en na d

tra sn a tc oi n- yb -t ar n cas ti no f ro ona ht re orp du tc enil .

A A B Transa tc ion T nar saction T asnar c noit

tcudorP eniL tcudorP eniL B A

BA ynapmoC g y g

y g p g

ELPMAXE GNIPUORG

elpmaxE esaB esaC tcudorP A tcudorP B

ssorG ecer stpi 0,01$ 00 0, 00 ,5 00 0,0 00 ,5 000 0, 00 tsoC fo og o sd 000,000,6 000,000,4 000,000,2

ssorG nigram 000,000,4 000,000,1 000,000,3 tceridnI sesnepxe 000,000,3 000,057 000,052,2

teN emocni 0,1 00 , 00 0 25 0,0 00 57 0 0, 00

ssorG stpieceR hteM od 00,004 0 00,002 0 000,002 ITC dohteM 5 00 0, 00 00,521 0 000,573

CI - CSID ocnI me 500 0, 00 002 , 000 573 , 000

Ma anigr l Cost ni g

• fI eht profit m ra ig n no e px ro t s la es is ssel ht an ht e

or fit ma nigr no ow rldwide s sela of ht e as emdorp uct, t eh m gra in la oc st ni g ur l se m ya be ap lp ie d

to olla cate ylno am gr i lan or airav b el costs aga i sn tropxe t re piec .st

• O larev l forp it p re c ne tage timil ation O( PP) li stimropxe t TC I to fu ll cost gni TC I from all as les (for gie n

dna od m citse .)

p g

Ma anigr l C gnitso E ax m lp e

Example To at l S la es opxE rt Domestic

orG ss recei tp s $ 01 ,000, 00 0 5,00 00,0 0 ,000,5 000

oC st fo doog s 6,000,000 3 005, ,000 2, 05 0 0, 00

M gra i an l oC sting ITC 4, 00 0,000 1,500, 00 0 2 005, ,000

dnI i er tc e nepx s se 2, 00 0,000 750,000 1, 52 0 0, 00

uF ll oC sti gn CTI 2,000,000 57 0,000 1, 52 0 0, 00

M tiforP CM igra n 03 %

OPP 02 %

CM ITC L( im ti de ot O PP ) 1,0 00 ,000

CI - ID SC In oc me 5 00 ,000

E epx nse All taco ion na d A pp ro t noi em nt

• Wh ne gnisu eht ITC m dohte , ov re head c tso s ra e

g y p s ,sela ba es d on the lur es u redn T er a rus y Re .gSec. 168.1 -8.

rene lla la l aco t de eb wt ee n ex ro t na d od m tse ci

T ar tcasn i no -by-Transac it on

• The rp i ic ng me ht do ohc es n si uqer i der no a

tra sn a tc oi n- yb - art n itcas on basis how eve r naaunna l election can eb made to org up t nar sacti no s

ni accord ecna wi ht orp du tc s ro p dor uct il nes. • Ne ti eh r eht g or ss er c ie p st ron CTI met doh m ya b e

lppa ied in a w ya ht at c sua se , in yna ta elbax y ae ,r assol the S.U . e px ort re er( tal de sup lp i )re .

; ,

Docum tne ation

• S ruo ce Data (Sa sel dna C so t of Sal )se S pu p ro t • Pr do cu t H crarei hy a dn uS ropp t • E epx sn e A oll c ta i no & App ro t noi ment M hte o od l go y • T snar act anoi l A an l sy si

– Q lau fi ied E ropx t S sela ( .S.U M una f rutca ed, N no - U.S D . se ti an t noi and 05 % C netno )t

– P gnicir M dohte R trope s • F ro m 1 021 -IC- CSID

A cnavd ed T cipo s

– R hto I AR – Exec tu ive Com tasnep io n– S icruo ng (P issa ve) – Transa tc ion- yb -T casnar it o n– P udor c re 's aoL sn – CI - ID SC dna 86 b(3 )– Sh ra de ID S sC

E ucex t vi e Com asnep t oi n

CI - CSID wo n pihsre si tes pu hguorht yek eeyolpme s.

mE lp oy ee

CI - ID SC Commi ss ion

O nw er C-Co pr

S gnicruo B fene sti • IC-D SI C divid ne ds a er co edisn r de f ngiero s cruo de

ocni me to S.U . ow ren s • IC-D SI C divi ed n sd are c ta roge i ez d ni to eht ssap evi

ab s ek t • Can esu CI - ID SC to i rcn e esa the a ib l yti ot u it zil e

tax cre id ts in the p ssa vi e ba eks t – T ti le pas as eg – F SI C i ocn em

T tcasnar i no -by-Tra sn a tc ion • yaM yltnacifingis esaercni CI - CSID tifeneb

– derapmoC ot gga ger eta

• seriuqeR decnavda erawtfos snoitacilppa

– noitaretI fo evitanretla sgnipuorg dna lanigram gnitsoc sesylana

ed iimre noi fo nepo sraey

p gg g

R et natti f Docume tn a it on

• •

g p y y g oc pr orat noi .)

The bor or wer m su t inc er esa sti ni v ne to ,yr nalp ,t cte . yb a n

oma nu t equ la to ht e lo na by ht e ne d fo ht e ey ar fo ht e ol an.

These orp ducer's lo na s ra e qu ifila ed xe port ssa e st and ehtni et tser of these lo na s oc sn ti ut et s uq ila fied xe p ro t r iece tp s.

The lo na si gised nated as a "pro ecud 'r s ol an" w nihti t eh em an ni gof CRI .s 99 3 )d( at the mit e of ht e loa .n

P dor u rec 's Loans • orP ud ce 'r s loa sn are a ac et gory of qu la i if de ex op tr as stes hw ci h

pe mr sti a DI CS to naol i st at x de ef rr ed p or if ts cab k to its par tnepmoc gnirutcafunam yna ( .S.U rehto yna ro pxe gnirutcafunam tro

• • •

IC-D SI C na d 863( )b S ela s • U es of CI - ID SC d seo n to rp e lc u ed use of S tce io n

b(368 ) to i rcn ea es f ngiero so ecru inc emo

• C na ialc m IC-DI CS eneb f ti no 863( )b s ela s

• M ya be uqer ired to al ol c pa/eta por noit IC- CSIDoc imm ssi no ot f ro e ngi os urce ni come ednu r

S noitce 861