Question

What is a pass-through entity?

Answer 1

I try to avoid linking people to Wikipedia, but it seems appropriate here.

http://en.wikipedia.org/wiki/Flow-through_entity

Does it help?

Answer 2

A flow-through entity (FTE) is a legal entity where income "flows through" to investors or owners; that is, the income of the entity is treated as the income of the investors or owners. Flow-through entities are also known as pass-through entities or fiscally-transparent entities. Depending on the local tax regulations, this structure can avoid dividend tax and double taxation because only owners or investors are taxed on the revenue. Technically, for tax purposes, flow-through entities are considered "non-entities" because they are not taxed; rather, taxation "flows-through" to another tax return.( http://en.wikipedia.org/wiki/Flow-through_entity)