In the context of cross-border business transactions, the term
hybrid entity is often mentioned. Generally, a hybrid entity
is considered, for tax purposes, as one type of entity (e.g., a
corporation) in one jurisdiction while being considered another
type of entity (e.g., a partnership) in another jurisdiction.
One example of a hybrid entity is an unlimited liability
corporation (ULC). These are Canadian corporations that are
offered in Alberta, British Columbia and Nova Scotia. Shareholders
of ULCs are liable for the debts and liabilities of the company.
For Canadian income tax purposes, ULCs are considered corporations
and are subject to Canadian income taxation. However, for US tax
purposes ULCs may be considered "flow-through entities"
(i.e., the ULC is disregarded and the earnings of the ULC are
flowed through to the ultimate owners of the ULC). This tax
treatment may be useful since the income of the ULC may be
consolidated with that of its US parent for US
