Overview: The Disregarded Entity & Check-the-Box
Virginia La Torre Jeker, J.D.
US International Tax (NY Bar 1984- current), Forbes Contributor, Forbes, Top 100 Tax Twitter Accounts; Bloomberg Tax Pro to Follow and Bloomberg Tax Author; Quoted NYT, WSJ, Newsweek
What Is a “disregarded entity”? How is it used in US tax planning??Learn all the details in today’s post.?
The beauty of a disregarded entity is that it is used most often by its owner to obtain limited liability, while at the same time, without causing any US federal income tax consequences due to the structure. There are lots of innovative possibilities, especially when it comes to foreign (non-US) corporations that can elect how they will be treated from a US tax perspective, simply by "checking a box", which can avoid the CFC, GILTI and PFIC tax issues that would otherwise arise for the US shareholder.
Checking the box is easy... but don't be fooled.?The decision to make the election has to be carefully considered with advice from a knowledgeable tax professional. Let us know if you need help planning your business structure!
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