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Disregarded Entity

What is a Disregarded Entity?

For federal income tax purposes, a Disregarded Entity is an entity with a sole owner who is not distinct from the owner. This indicates that the tax liabilities by this kind of company are included in the owner's income tax return. Thus, this company is not recognized for tax purposes as a business separate from the owner.
The word comes from the Internal Revenue Service's (IRS) contempt of the business as a distinct entity from its owner.

What Are the Advantages of a Disregarded Entity?