Entities are eligible for the inactive entity exemption if all six of the following conditions are met:
- Existence before January 1, 2020: The entity was established on or before January 1, 2020.
- Inactive Business Operations: The entity is not actively engaged in business.
- Non-Foreign Ownership: The entity is not owned, either wholly or partially, directly or indirectly, by a foreign person. A foreign person means a person who is not a United States person, as defined in section 7701(a)(30) of the Internal Revenue Code of 1986, encompassing U.S. citizens, residents, domestic partnerships and corporations, and other specified entities.
- Stable Ownership: No changes in ownership have occurred in the preceding twelve-month period.
- Limited Financial Transactions: The entity has neither sent nor received funds exceeding $1,000 directly or through any affiliated financial account, in the past twelve months.
- Asset Inactivity: The entity does not possess any assets, domestically or internationally, and holds no ownership interests in corporations, limited liability companies, or similar entities.
To qualify for the inactive entity exemption, your entity must meet all six of these conditions.