Flow-Through Entity

AAA

DEFINITION of 'Flow-Through Entity'

A legal business entity that passes income on to the owners and/or investors. Flow-through entities are a common device used to limit taxation by avoiding double taxation. Only the investors/owners are taxed on revenues, not the entity itself.

INVESTOPEDIA EXPLAINS 'Flow-Through Entity'

Also known as pass-through entities, flow-through entities are commonly grouped into limited, general and limited liability partnerships, along with income trusts and limited liability companies. Although flow-throughs are considered non-entities for tax purposes, U.S. law still requires flow-through entities to file an annual K-1 statement.

RELATED TERMS
  1. Pass-Through Security

    A pool of fixed-income securities backed by a package of assets. ...
  2. Pass-Through Certificate

    Fixed-income securities that represent an undivided interest ...
  3. Commercial Mortgage-Backed Securities ...

    A type of mortgage-backed security that is secured by the loan ...
  4. Mortgage-Backed Security (MBS)

    A type of asset-backed security that is secured by a mortgage ...
  5. Peter Pan Syndrome

    A regulatory environment in which firms prefer to stay small ...
  6. BHD (Berhad)

    The suffix Bhd. is an abbreviation of a Malay word "berhad," ...
Related Articles
  1. 3 Retirement Plan Moves To Make Before ...
    Taxes

    3 Retirement Plan Moves To Make Before ...

  2. Introduction To Multi-Discipline Accounts
    Investing Basics

    Introduction To Multi-Discipline Accounts

  3. Pros And Cons Of Offshore Investing
    Personal Finance

    Pros And Cons Of Offshore Investing

  4. 10 Money-Saving Year-End Tax Tips
    Taxes

    10 Money-Saving Year-End Tax Tips

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center