Definition
Blocker Corporation
A corporation inserted above an investment so its owners receive dividends rather than pass-through income.
A blocker is a corporation placed between an investor and a pass-through investment, so that the investor holds stock in a company rather than an interest in a partnership. It exists to stop unwanted tax characteristics flowing through: tax-exempt investors use blockers to avoid unrelated business taxable income, and non-US investors use them to avoid being treated as engaged in a US trade or business and having to file a US return. The cost is an entity-level layer of corporate tax on the blocker's income, so a blocker is a deliberate trade of tax efficiency for filing simplicity and risk containment. Single-asset venture SPVs holding passive stock rarely need one; vehicles holding operating partnerships or generating business income more often do.