Form 8404

Department of the Treasury 

Internal Revenue Service 

Interest Charge on DISC-Related 

Deferred Tax Liability

File Form 8404 separately from your income tax return. See Where to file below. 

Go to www.irs.gov/Form8404 for the latest information.

OMB No. 1545-0939

2023

Name of shareholder

Address (number, street, room, suite, or P.O. box number)

City or town, state or province, country, and ZIP or foreign postal code

A Check applicable box to 

 show type of taxpayer.

Corporation

Individual

Trust or 

Decedent’s estate

B Shareholder’s identifying 

 number

C IC-DISC’s identifying 

 number

D Shareholder’s tax year for which interest charge is required to be paid (see instructions) E Name of IC-DISC

Note: See Line-by-Line Instructions, later.

1 Taxable income or loss on tax return (actual or estimated) . . . . . . . . . . . . 1

2 Deferred DISC income from line 10, Part III, Schedule K (Form 1120-IC-DISC) . . . . . 2

3 Section 995(f)(2) adjustments to line 1 income or loss . . . . . . . . . . . . . 3

4 Combine lines 1, 2, and 3. If zero or less, don’t file this form . . . . . . . . . . . 4

5 Tax liability on line 4 amount . . . . . . . . . . . . . . . . . . . . . 5

6 Tax liability per return (actual or estimated) . . . . . . . . . . . . . . . . . 6

7 DISC-related deferred tax liability. Subtract line 6 from line 5 . . . . . . . . . . . 7

8 Base period T-bill rate factor . . . . . . . . . . . . . . . . . . . . . 8

9 Interest charge due. Multiply line 7 by line 8. (See Paying the interest charge below.) . . 9

Sign 

Here

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and 

belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

Signature and title (if any) Date

Paid 

Preparer 

Use Only

Print/Type preparer’s name Preparer’s signature Date Check if 

self-employed

PTIN

Firm’s name 

Firm’s address 

Firm’s EIN 

Phone no.

Section references are to the Internal Revenue 

Code unless otherwise noted.

Future Developments

For the latest information about developments 

related to Form 8404 and its instructions, 

such as legislation enacted after they were 

published, go to www.irs.gov/Form8404.

General Instructions

Purpose of form. Shareholders of Interest

Charge Domestic International Sales

Corporations (IC-DISCs) use Form 8404 to

figure and report their interest owed on 

DISC-related deferred tax liability.

Who must file. You must file Form 8404 if (a) 

you are a shareholder of an IC-DISC (or 

former IC-DISC); (b) the IC-DISC reports 

deferred DISC income to you on line 10, Part 

III of Schedule K (Form 1120-IC-DISC); and (c) 

the addition of this income would result in 

increased taxable income if it were included 

on your tax return for the tax year.

When to file. File Form 8404 by the due date

of your federal income tax return (excluding

extensions) for your tax year that ends with or

includes the IC-DISC’s tax year end.

For example, you are a fiscal year 

corporation with an August 1, 2023, to July 

31, 2024, tax year and you are a shareholder 

in an IC-DISC with an August 1, 2023, to July 

31, 2024, tax year that reports deferred DISC 

income to you for its tax year ending July 31, 

2024. Because your tax year ends with the 

IC-DISC’s tax year, you are required to file 

Form 8404 on or before November 15, 2024 

(31/2 months after your tax year ends). 

Where to file. File Form 8404 at the following

address.

Department of the Treasury 

Internal Revenue Service 

Kansas City, MO 64999

Paying the interest charge. You must pay

the interest charge shown on line 9 by the

date your federal income tax for the tax year

is required to be paid. For individuals and 

corporations, the interest is generally due on 

the 15th day of the 4th month following the 

close of the tax year. For corporations with a 

tax year ending on June 30, see section 

2006(a)(3)(B) of P.L. 114-41. 

Attach a check or money order made 

payable to “United States Treasury” for the 

full amount of the interest charge. Don’t 

combine the interest charge with any other 

tax or interest due. Write your identification 

number and “Form 8404—Interest Due” on 

your payment. 

If the interest charge isn’t paid by the due 

date, interest, compounded daily, at the rate 

specified under section 6621, will be imposed 

on the amount of unpaid interest from the due 

date until the date the interest is paid.

Payment of estimated tax isn’t required for 

the interest charge. See Proposed 

Regulations section 1.995(f)-1(j)(3) for other 

details.

For corporations (other than S 

corporations), the annual interest charge is 

deductible as an interest expense for the tax 

year it is paid or accrued. See Proposed 

Regulations section 1.995(f)-1(j)(2) for details 

on the tax year of deductibility. For other 

filers, this interest isn’t deductible.

Amended Form 8404. You are required to file

an amended Form 8404 only if the amount of

the DISC-related deferred tax liability (line 7)

changes as a result of audit adjustments, 

changes you make by the filing of an 

amended return, or if estimates were used on 

your original Form 8404 and changes were 

made to these estimates when you filed your 

tax return. See Proposed Regulations section 

1.995(f)-1(j)(4) for details.

Specific Instructions

Name and address. Enter the name and

address as shown on your tax return from

which the income or loss on line 1 of Form

8404 is obtained. If the return is a joint return,

also enter your spouse’s name as shown on

Form 1040 or 1040-SR.

Item A—Type of taxpayer. Check the

applicable box to indicate your status as a

taxpayer.

Partnerships and S corporations attribute 

their share of deferred DISC income to 

partners and shareholders, and the partners 

and shareholders complete Form 8404.

Item B—Shareholder’s identifying number. 

Individuals must enter their social security

number. Other filers must enter their employer

identification number.

Item C—IC-DISC’s identifying number. 

Enter the identifying number of the IC-DISC

from the Schedule K (Form 1120-IC-DISC) on

which the deferred DISC income was reported 

to you. If income is reported to you from more 

than one IC-DISC, enter each IC-DISC’s 

identifying number in item C, each IC-DISC’s 

For Privacy Act and Paperwork Reduction Act Notice, see instructions. Cat. No. 62423Z Form 8404 (2023) 
Form 8404 (2023) Page 2 

name in item E (or, enter “See attached” for 

items C and E, and attach a statement of the 

IC-DISCs’ names and respective numbers), 

and report the combined income on line 2.

Item D—Tax year. Enter in item D the

calendar year or the beginning and ending

dates of the tax year shown on your tax return 

for which the interest charge is figured.

Special Computation Rules

Carrybacks. The determination of the

shareholder’s DISC-related deferred tax

liability on lines 1 through 7 shall be made

without taking into account any capital loss 

carryback or credit carryback to the tax year.

Carryovers. The determination of the

shareholder’s tax liability (line 5) for the tax

year is made by disregarding any loss,

deduction, or credit to the extent that such

loss, deduction, or credit may be carried 

forward by the shareholder to any other tax 

year.

Note: If the tax year is the last tax year to

which the amount of carryforward (of loss,

deduction, or credit) may be carried, the line 3 

adjustments and line 5 tax shall be figured

with regard to the full amount of such

carryforward.

For example, a shareholder had an NOL 

carryover (originating before 2018) to 2023 of 

$12,000; $10,000 income to which $10,000 of 

the NOL can be applied; $2,000 allowable 

NOL carryover to 2024; and $5,000 deferred 

DISC income for 2023. In this case, for 

purposes of figuring line 5, the allowed NOL is 

$10,000. Note: If 2023 was the last tax year to 

which the $12,000 NOL (originating before 

2018) could be carried, the full $12,000 NOL 

would be allowed for purposes of figuring line 

5 tax liability. The additional $2,000 loss 

would be entered on line 3.

Other adjustments. In figuring line 3 

adjustments, take into account any income

and expense adjustments that don’t result in 

amounts that may be carried back or forward

to other tax years. For example, in the case of 

an IC-DISC shareholder who is an individual, 

the amount of medical expenses allowable as 

a deduction under section 213 must be 

redetermined for purposes of line 3 

adjustments. 

See Proposed Regulations section 

1.995(f)-1(d) for other details regarding these 

and other special computation rules.

Line-by-Line Instructions

Line 1. Enter on line 1 the taxable income or

loss from your federal income tax return for

your tax year that ends with or includes the

IC-DISC’s tax year end. If you haven’t yet filed 

your tax return, estimate your income or loss 

based on all information available to you. See 

Amended Form 8404, earlier.

Line 2. Enter the deferred DISC income from

line 10, Part III of Schedule K (Form 

1120-IC-DISC), for the IC-DISC tax year that

ends with or within your tax year.

Line 3. Enter the net amount of all section

995(f)(2) adjustments to taxable income. See 

Special Computation Rules, earlier, for details

on the income (loss) and expense 

adjustments to be made. If more than one 

adjustment is involved, attach a statement

listing each item and show the computation of 

the net amount.

Lines 5 and 6. “Tax liability” on lines 5 and 6

(with and without the deferred DISC income)

means the amount of tax imposed on the 

IC-DISC shareholder for the tax year by

chapter 1 of the Internal Revenue Code (other 

than taxes listed below) reduced by credits 

allowable against such tax (other than credits 

listed below).

See Special Computation Rules, earlier, for 

rules for carrybacks and carryovers. These 

rules may affect the line 5 computation.

The following taxes aren’t taken into 

account.

• Alternative minimum tax (individuals only).

• Any other provisions described in section 

26(b)(2) (relating to certain other taxes treated 

as not imposed by chapter 1).

The following credits aren’t taken into 

account.

• Section 31 (taxes withheld on wages).

• Section 32 (earned income credit).

• Section 34 (fuels credit).

For 2023, a Form 1040 or 1040-SR filer or a 

Form 1120 filer using the above rules will 

generally figure their line 6 tax liability using 

the following items shown on the following 

lines of those forms. All other filers should use 

the corresponding lines of other income tax 

returns. If you haven’t yet filed your return, 

estimate the line 6 tax liability based on all 

information available to you.

2023 

Form 1040 

or 1040-SR 

Line

2023 

Form 1120 

Line

Tax less nonrefundable 

credits . . . . . . 22 7, Sch. J

Plus: (1) Recapture taxes * *

 (2) Prior year minimum 

tax credit . . . 6b, Sch. 3 5d, Sch. J

Less: (1) Alternative minimum 

 tax . . . . . 1, Sch. 2

(2) Additional child tax 

credit . . . . 28

(3) American 

opportunity credit 29

(4) Premium tax credit 

(Form 8962) . . 9, Sch. 3

(5) Credit for tax paid 

on undistributed 

capital gains (Form 

2439) . . . . 13a, Sch. 3 20a, Sch. J

*Caution: Only use the portion of Form 1040 

or 1040-SR, line 24, or Form 1120, Schedule 

J, line 10, attributable to recapture of credits 

allowable against taxes treated as imposed 

under chapter 1 (for example, recapture of 

investment tax and low-income housing 

credits). See section 26(b)(2) for a list of 

recapture taxes to exclude.

Line 8. The base period T-bill rate is defined

in section 995(f)(4). The base period T-bill rate

is compounded daily based on the number of

days in the shareholder’s tax year to

determine the base period T-bill rate factor.

The base period T-bill rate factor for 2023 is 

0.050531967 for a 365-day tax year. Enter the 

appropriate factor on line 8 of Form 8404. See 

Rev. Rul. 2023-23, 2023-51 I.R.B. 1472, for a 

short tax year or a 52-53-week tax year.

Privacy Act and Paperwork Reduction Act 

Notice. We ask for the information on this

form to carry out the Internal Revenue laws of

the United States. We need it to figure and

collect the right amount of tax. Section 995(f)

requires taxpayers to pay over to the IRS

interest on DISC-Related Deferred Tax

Liability. This form is used to determine the

amount of tax that you owe. Sections 6001

and 6011 require you to provide the

requested information if the tax applies to

you. Section 6109 requires you to provide 

your identifying number. Routine uses of this 

information include disclosing it to the 

Department of Justice for civil and criminal 

litigation and to other federal agencies, as 

provided by law. We may disclose the 

information to cities, states, the District of 

Columbia, and U.S. commonwealths or 

territories to administer their tax laws. We 

may also disclose this information to other 

countries under a tax treaty, to federal and 

state agencies to enforce federal nontax 

criminal laws, or to federal law enforcement 

and intelligence agencies to combat terrorism. 

If you don’t provide this information or provide 

incomplete or fraudulent information, you may 

be subject to penalties.

You aren’t required to provide the 

information requested on a form that is 

subject to the Paperwork Reduction Act 

unless the form displays a valid OMB control 

number. Books or records relating to a form 

or its instructions must be retained as long as 

their contents may become material in the 

administration of any Internal Revenue law. 

Generally, tax returns and return information 

are confidential, as required by section 6103.

The time needed to complete and file this 

form will vary depending on individual 

circumstances. The estimated burden for 

business taxpayers filing this form is 

approved under OMB control number 

1545-0123 and is included in the estimates 

shown in the instructions for their business 

income tax return. The estimated burden for 

individual taxpayers filing this form is 

approved under OMB control number 

1545-0074 and is included in the estimates 

shown in the instructions for their individual 

income tax return. The estimated burden for 

all other taxpayers who file this form is shown 

below.

Recordkeeping . . . . . 4 hr., 4 min.

Learning about the law 

or the form . . . . . . 1 hr., 47 min.

Preparing, copying, and sending 

the form to the IRS . . . 1 hr., 55 min.

If you have comments concerning the 

accuracy of these time estimates or 

suggestions for making this form simpler, we 

would be happy to hear from you. You can 

send us comments from 

www.irs.gov/FormComments. Or you can 

write to the Internal Revenue Service, Tax 

Forms and Publications, 1111 Constitution 

Ave. NW, IR-6526, Washington, DC 20224.

Don’t send the form to this office. Instead, 

see Where to file, earlier.