Foreign Entities Classified Even When Classification Irrelevant

April 2, 2021, 8:45 PM

Certain foreign entities can be classified in a particular way—such as, for instance, a partnership or association—even while that classification is irrelevant, according to a new IRS memorandum released Friday.

“An entity has a classification for federal tax purposes at all times,” said the document, from the office of the agency’s top legal adviser, “including during periods when its classification is not relevant and regardless of whether the classification has ever been relevant.”

  • If the classification of a foreign eligible entity hasn’t been relevant, it elects to change its classification, and that change is effective as soon as its type...

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