Andrew Mitchel LLC

International Tax Blog - New and Interesting International Tax Issues

Flow-Thru Symbols: An Up-Side-Down “Funnel” Theme


For my charts, I typically show flow-thru entities as rectangles with small triangles in the lower right corner.  I think of the triangle as an up-side-down funnel.  The funnel allows the income to flow from the entity upwards to its owner.


For entities that are true partnerships, I typically show them as triangles to reflect their flow-thru nature.


S corporations are generally flow-thru entities.  To continue the funnel theme, I show S corporations as trapezoids, with the sides angling inward up towards the owner.


The income of a trust is sometimes taxed at the trust level, and other times the income is taxed to the beneficiaries/grantors.  I use a pentagon to represent a trust.  I think of the top two sides of the pentagon as “sort of” looking like a triangle, thereby representing the “sort of” flow-thru nature of a trust.


The income of a grantor trust is treated as earned by the grantor.  The grantor may or may not be a beneficiary of the trust.  I have recently added a new symbol to reflect when a person is considered the grantor of a trust (and therefore taxed on the income of the trust).  This symbol shows a gap in the top side of the pentagon.  The idea is intended to continue the up-side-down funnel theme, where the funnel has a “hole”, and the income flows to that person.


When dealing with multiple countries, the flow-thru nature of an entity can be confusing.  One country may treat the entity as a flow-thru and the other country may not.  When the flow-thru classification for multiple countries is important, I include multiple triangles within the rectangle.  The triangle in the lower right represents the U.S. classification.  The triangle in the lower left represents the classification for the country where the entity is formed.  The triangle(s) at the top of the rectangle represents the classification of the entity in the shareholder(s)’ country(ies).


A small up-side-down triangle within the rectangle indicates that the entity is not flow-thru for the respective country.  I think of these small up-side-down triangles as corks in a bottle, which stop the income from flowing upwards.

For a related chart shape blog post, see here.

Tags: Charts - Situational Charts