Only certain foreign corporations or business organizations are eligible for the US flow through election. A list of the entities which are not eligible for this election are listed by country and included in the instructions for IRS Form 8832. It is best to review this list and see what types of foreign entities will be eligible to make the flow through election if it would be beneficial to your US taxes prior to forming a foreign corporation or LLC.
You may have to talk with an International Tax Expert to determine if a flow through election will benefit your business plan. It does avoid possibilities of double taxation (if you plan to distribute most of the income to yourself) and Controlled Foreign Corporation Subpart F rules as well as other potential US tax problems. Most foreign attorneys and accountants who help you form your foreign business entity do not know these US tax rules. It is often difficult after the fact to change the type of entity (depending on the foreign country in which it is formed) if you later discover that you do wish to have the income flow through to your US return. We have helped well over a hundred expatriate business owners determining which type of foreign entity will be best for them under US tax law.