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OWNERSHIP & ENTITIES

Disregarded entity

Also called: single-member LLC · SMLLC · tax disregarded LLC

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PLAIN-ENGLISH DEFINITION

An entity that is ignored as separate from its owner for certain federal income-tax purposes.

What it means in practice.

The IRS instructions recognize disregarded entities in the context of related-party exchange reporting. A single-member LLC may be disregarded for federal income tax purposes depending on its elections and ownership.

Why it matters.

Entity form under state law and federal tax classification are not always the same thing.

Additional notes.

The IRS instructions recognize disregarded entities in the context of related-party exchange reporting. A single-member LLC may be disregarded for federal income tax purposes depending on its elections and ownership.

PRIMARY / REFERENCE SOURCES

Read the source material.

irs.gov ↗irs.gov/instructions/i8824
CONNECTED LANGUAGE

Related definitions.

Ownership & EntitiesTaxpayerThe person or entity whose property is being exchanged and whose tax treatment is at issue.Ownership & EntitiesSame-taxpayer principleIndustry shorthand for the need to maintain appropriate taxpayer continuity between the relinquished and replacement sides of an exchange.
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