| Conduit Theory |
A theory stating that an investment firm passing all capital gains, interest, and dividends onto their customers/shareholders shouldn't be levied at the corporate level like most regular companies are.
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Basically the firm passes income (without taxing themselves) directly to the investors who are then taxed as individuals. This theory means investors are taxed once on the same income, whereas in regular companies investors are taxed twice. Both when the company reports income and when dividends are received. An example is a REIT or mutual fund company.
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