Pipeline Theory

外汇网2021-06-19 14:18:50 209

A notion that an investment firm that passes all capital gains, interest and pidends on to its customers/shareholders shouldn't be levied at the corporate level like most regular companies are.

Also referred to as "conduit theory".

According to pipeline theory, the investment firm passes income directly to the investors, who are then taxed as inpiduals. This means that investors are taxed once on the income, whereas in regular companies investors are taxed twice: when the company reports income (at the corporate level) and when pidends are received (as inpidual income). Pipeline theory would apply to mutual fund companies and real estate investment trusts (REITs).

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