Interest Charge on DISC Related Deferred Tax Liability, Form 8404 (2023)

Form 8404 helps shareholders of Interest Charge Domestic International Sales Corporations (IC-DISCs) calculate and report interest owed on deferred tax liabilities. This applies only for tax years ending before December 31, 2023, as IC-DISCs were eliminated after 2021.

What is Form 8404?

  • Used to calculate and report interest on deferred DISC income for shareholders of IC-DISCs (prior to 2022).
  • Purpose: Enforce timely taxation on deferred income by charging interest until distribution.
  • Applies to tax years ending before December 31, 2023 only (IC-DISCs eliminated after 2021).

Who Needs Form 8404?

You must file if you are:

  • You are a shareholder of an IC-DISC (or former IC-DISC).
  • The IC-DISC reports deferred DISC income to you on line 10, Part III of Schedule K (Form 1120-IC-DISC).
  • Adding this income to your tax return for the year would increase your taxable income.

Key Points to Remember:

  • Form 8404 is no longer valid for tax years ending after December 31, 2023.
  • Pay the calculated interest by the due date of your federal income tax return.

For the current year's Form 8404, click here.