What are pass through entities?
The concept of “pass-through entity’s attribution” stems from the fact that this entity’s ownership can be attributed to another entity. The IRS Code prescribes that pass-through entities’ income belongs to that other entity. Pass-through entities earn the income but are not responsible to pay the tax related to this income. In effect, the pass-through entity’s income and related tax liability passes through to the entity having ownership. Examples are estates, LLCs, partnerships, S Corporations, and trusts.