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 Certificate

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

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

    A type of asset-backed security that is secured by a mortgage ...
  4. Pass-Through Security

    A pool of fixed-income securities backed by a package of assets. ...
  5. Peter Pan Syndrome

    A regulatory environment in which firms prefer to stay small ...
  6. AG (Aktiengesellschaft)

    AG is an abbreviation of Aktiengesellschaft, which is a German ...
RELATED FAQS
  1. How are transfer prices set?

    The United States, like most nations, does not want to allow transfer pricing methods that reduce the amount of taxes the ... Read Full Answer >>
  2. What is the best reason to pursue a backward integration?

    Saving money on costs and improving efficiency are two good reasons to pursue backward integration. Backward integration ... Read Full Answer >>
  3. Is backward integration the same thing as vertical integration?

    Backward integration is a type of vertical integration, but they are not the same. Vertical integration is the process of ... Read Full Answer >>
  4. How has Larry Page's vision for Google differed from that of Sergey Brin?

    As of March 2015, Larry Page's vision for Google (GOOG) appears to be even more ambitious and diversified than that of Sergey ... Read Full Answer >>
  5. What's the difference between a merger and a hostile takeover?

    The difference between a merger and a hostile takeover has to do with the manner in which two companies merge to become a ... Read Full Answer >>
  6. What's the difference between Porter's 5 forces and PESTLE analysis?

    Porter's Five Forces and PESTLE analysis are two sets of business tools for analyzing situations and helping companies to ... Read Full Answer >>
Related Articles
  1. Taxes

    3 Retirement Plan Moves To Make Before Year-End

    If you don't know what must be done before December 31 you may miss opportunities - or even pay penalties.
  2. Investing Basics

    Introduction To Multi-Discipline Accounts

    You get multiple managers, affordable diversification, customization and consolidated reporting all under one roof.
  3. Personal Finance

    Pros And Cons Of Offshore Investing

    Tax loopholes are shrinking, but there are still plenty of viable prospects. Get the big picture.
  4. Taxes

    10 Money-Saving Year-End Tax Tips

    Getting organized well before the deadline will curb your frustration and your tax liability.
  5. Economics

    What is a Partnership?

    A partnership is an organization where two or more owners operate a business.
  6. Stock Analysis

    What Makes LinnCo Different From MLPs?

    MLPs are some of the favorite investments of dividend investors, as the surge in the energy industry increased the amount of income that MLPs paid out to.
  7. Investing

    What's a Transfer Price?

    A transfer price is what one unit of a business charges another unit of the same business for a good or service. The transfer price is usually close to the prevailing market rate when different ...
  8. Stock Analysis

    Why Should Investors Read The Annual Reports?

    All investors should read each year the annual report from their top stocks, which contains valuable information and facts they weren't probably aware of.
  9. Investing

    Who are Stakeholders?

    “Stakeholder” is used in commerce to describe any party who has an interest in a business or enterprise. Traditionally, stakeholders in a corporation are shareholders, employees, customers and ...
  10. Economics

    Afraid Of A New Financial Crisis?

    It may be time for the U.S. to adopt a model for financial companies that better deters risky financial behavior.

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center