What does the tax term “disregarded” mean?

Disregarded describes when an entity is treated as a division or part of its owner.  A disregarded entity does not file tax returns in its own name, but its activity is included in the return of its owner.  The rules as to when an entity may be disregarded differ between federal and state tax reporting. 

See the discussion topic When is a Single Member Limited Liability Company (“SMLLC”) disregarded for franchise, excise purposes for related information.

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