Domestic International Sales Corporation [DISC] Law and Legal Definition

The Domestic International Sales Corporation (DISC) is a federal corporation receiving reduced income tax rates. It is a subsidiary whose income is primarily attributable to exports. Generally, shareholders of the DISC receive reduced income tax rates on qualifying income from exports of U.S. made goods.

The function of DISC is to enter into contracts with a producer or reseller of the U.S. made goods. In Microsoft Corp. v. Comm'r, 311 F.3d 1178, 1180 (9th Cir. 2002), it was held that tax incentives are provided to the U.S. firms, so long as they are retained in a new type of U.S. corporation known as a Domestic International Sales Corporation or a DISC. A firm in the U.S. is recognized as a DISC only if the corporation's gross receipts and assets are export related.