On our sister website (www.andrewmitchel.com) we have published over 1,100 tax charts. Many shapes and colors are used in the charts. Heretofore, we have not published a comprehensive legend of the shapes and colors we use. In this blog posting, we explain many of the conventions that we use on our charts. Of course, with over 1,100 charts there are exceptions to these general rules.
Shapes are used in the charts primarily to designate various types of entities. The following shapes are used:
Rectangles represent corporate / limited liability entities.
- Triangles represent partnerships.
- Pentagons represent trusts.
- Trapezoids represent U.S. “S” corporations.
- Ovals represent individuals, the public, and a “catch all” other.
- Small pink circles with a, b, and c letters represent the order that several transactions take place within one box.
- Small triangles within rectangles represent entities treated as a flow-thru entities for U.S. tax purposes. Other international tax presentations often use a triangle within a rectangle to represent a partnership and an oval within a rectangle to represent a disregarded entity. Our charts do not use two different shapes for these two types of entities. Rather, in our charts the triangle represents flow-thru status and one must look to the percentage ownership in order to distinguish between partnership status and disregarded entity status. A 100% owned flow-thru entity is a disregarded entity and any other flow-thru entity is a partnership.
Partnerships and S corporations are typically not subject to an entity level tax. Trusts, similarly, are often not subject to an entity level tax. We have attempted to utilize similar shapes for partnerships, S corporations, and trusts in order to reflect their similar nature. Thus, the top two sides of the triangles for partnerships and the top two sides of the pentagons for trusts come to a point. Think of these two sides, if you will, as “funneling” the earnings, profits, etc. up to the owner/beneficiary. For S corporations, the two sides of the trapezoid turn inward, similar to the tops of the triangles and pentagons. This shape is intended to represent the same upward funneling concept.
Lines & Outlines
Thick, colored, dashed lines generally represent action, an agreement, or a special type of ownership (e.g., preferred stock). Typically, matching colored text describes these lines.
- Outlines of shapes are typically thin, black, solid lines.
- Shapes with outlines of thin, black, dashed lines represent either newly formed entities or non-entities (such as corporate divisions, property, etc.).
Background Colors for Shapes
Generally only two colors are used as background for shapes: white and blue. White generally means that the entity is a U.S. entity. Blue means that the entity is a non-U.S. (foreign) entity.
Loans Between Entities
Loans between entities are generally represented by a thick, colored, dashed line with matching colored text. Further, the lending entity has a “+” next to it, and the borrowing entity has a “-” next to it.
Recently Created Conventions
We have recently begun creating a number of charts that include trusts. As indicated above, these trusts are represented by pentagons. Some of the trusts are grantor trusts and some of them are non-grantor trusts. We believe that it would be useful to have a visual cue that distinguishes between grantor and non-grantor trusts. In this regard, we tentatively plan to represent grantor trusts with an outline of a thick, red line and to represent non-grantor trusts with an outline of the normal thin, black line.
Andrew Mitchel is an international tax attorney who advises businesses and individuals with cross-border activities.