8404

Interest Charge on DISC-Related Deferred Tax Liability

Agency
IRS
Revision
2025
Fillable fields
30
Pages
2
Official source
IRS form page
Checked
October 21, 2026
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Page 1 of form 8404

Form 8404: Interest Charge on DISC-Related Deferred Tax Liability

Form 8404, Interest Charge on DISC-Related Deferred Tax Liability, is used by shareholders of Interest Charge Domestic International Sales Corporations (IC-DISCs) to figure and report the interest they owe on DISC-related deferred tax liability.

The form compares the tax on the shareholder's income with and without the deferred DISC income reported on Schedule K (Form 1120-IC-DISC), and multiplies the difference by the base period T-bill rate factor. The form says to file it separately from the income tax return. The instructions are printed on the same two page PDF. This is the 2025 form, which gives a base period T-bill rate factor of 0.041641381 for a 365-day tax year.

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What's on Form 8404

Items A to E

Type of taxpayer, the shareholder's name, address and identifying number, the IC-DISC's identifying number and name, and the shareholder's tax year.

Lines 1 to 4: income

Taxable income or loss on the return, deferred DISC income from Schedule K (Form 1120-IC-DISC), section 995(f)(2)(B) adjustments, and the combined total.

Lines 5 to 7: tax liability

Tax liability on the line 4 amount, tax liability per the return, and the DISC-related deferred tax liability (line 5 minus line 6).

Lines 8 and 9: interest charge

The base period T-bill rate factor and the interest charge due, which is line 7 times line 8.

Signature and Paid Preparer Use Only

The declaration under penalties of perjury with signature, title and date, and the paid preparer's name, signature, PTIN, firm name, EIN, address and phone.

How to fill out Form 8404

  1. 1

    Items A to E

    Check the type of taxpayer and enter the name and address as shown on the tax return. Individuals enter their social security number in item B and other filers their EIN. Enter the IC-DISC's identifying number from Schedule K (Form 1120-IC-DISC), its name, and the tax year.

  2. 2

    Line 1

    Enter the taxable income or loss from the federal income tax return for the tax year that ends with or includes the IC-DISC's tax year end. If the return isn't filed yet, the instructions say to estimate it from all information available.

  3. 3

    Lines 2 to 4

    Enter the deferred DISC income from line 10, Part III, of Schedule K (Form 1120-IC-DISC) and the net section 995(f)(2)(B) adjustments, with a statement if there is more than one. Combine lines 1, 2 and 3 on line 4.

  4. 4

    Lines 5 and 6

    Enter the tax liability with and without the deferred DISC income. For 2025, the instructions list the Form 1040 or 1040-SR line 22 and the Form 1120 Schedule J line 7 amounts as the starting point for line 6.

  5. 5

    Line 7

    Subtract line 6 from line 5 to get the DISC-related deferred tax liability.

  6. 6

    Lines 8 and 9

    Enter the base period T-bill rate factor. For 2025 the instructions give 0.041641381 for a 365-day tax year and point to Rev. Rul. 2025-23 for a short or 52-53-week year. Multiply line 7 by line 8 on line 9.

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When to file, where to send it and paying

When to file

By the due date of the federal income tax return (excluding extensions) for the tax year that ends with or includes the IC-DISC's tax year end.

File separately

The form says to file it separately from the income tax return. For the address, the instructions point to www.irs.gov/wheretofile and the listing for forms that begin with the number 8.

Paying the interest charge

The instructions say the line 9 charge is paid by the date the federal income tax for the year is required to be paid, generally the 15th day of the 4th month after the tax year ends for individuals and corporations.

Late payment

If the charge isn't paid by the due date, the instructions say interest compounded daily at the section 6621 rate is imposed on the unpaid amount. Estimated tax payments aren't required for the charge.

Amended Form 8404

The instructions say an amended form is required only if line 7 changes because of audit adjustments, an amended return, or changes to estimates used on the original Form 8404.

Related forms

Who files Form 8404?

  • IC-DISC shareholders

    The filer is a shareholder of an IC-DISC or former IC-DISC, and the IC-DISC reports deferred DISC income to the shareholder on line 10, Part III, of Schedule K (Form 1120-IC-DISC).

  • When the income would raise taxable income

    The third condition is that adding this income would result in increased taxable income if it were included on the shareholder's return for the tax year. If line 4 is zero or less, the form says not to file it.

  • Corporations, individuals, trusts and estates

    Item A has boxes for a corporation, an individual, and a trust or decedent's estate.

  • Partners and S corporation shareholders

    The instructions say partnerships and S corporations attribute their share of deferred DISC income to partners and shareholders, and the partners and shareholders complete Form 8404.

The instructions say Form 8404 is filed by a shareholder of an IC-DISC (or former IC-DISC) when three conditions are all met.

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Questions about Form 8404

Who files Form 8404?

A shareholder of an IC-DISC or former IC-DISC that reports deferred DISC income on Schedule K (Form 1120-IC-DISC), when adding that income would increase taxable income for the year.

Is Form 8404 attached to the income tax return?

No. The form says to file it separately from the income tax return.

When is Form 8404 due?

By the due date of the federal income tax return, excluding extensions, for the tax year that ends with or includes the IC-DISC's tax year end.

What is the 2025 base period T-bill rate factor?

The instructions give 0.041641381 for a 365-day tax year, and point to Rev. Rul. 2025-23 for a short tax year or a 52-53-week tax year.

What if line 4 is zero or less?

The form says not to file it.

Is the interest charge deductible?

The instructions say that for corporations other than S corporations it is deductible as interest expense for the year paid or accrued, and that for other filers it isn't deductible.