Single-member disregarded entity
Default federal tax classification for single-member LLCs: the LLC is invisible for tax purposes.
Definition
Single-member disregarded entity is the IRS default tax classification for single-member LLCs. The LLC is invisible for federal tax purposes; income flows directly to the owner tax return. The owner files Form 1040 (US person) or 1040-NR (non-resident).
Context
Single-member non-resident-owned LLCs file Form 5472 plus pro forma 1120 annually but are not separately taxed.
Example
A Delaware single-member LLC owned by a Bangladesh founder. The LLC is disregarded; the Bangladesh founder is the federal taxpayer. Form 5472 obligation applies; no separate LLC-level federal tax.
Common pitfalls
- State tax treatment may differ from federal.
- Multi-member elections change classification to partnership.