Conduit Theory

Conduit Theory - A conduit theory is the thought that companies or corporations with qualifying investments and REITs should be able to side-step, or avoid, double taxation by skirting capital gains taxes, interest expenses, and dividend income directly to the company or corporation's shareholders, without incurring the tax liability itself, as a separate entity. REITs are an investment trust for real estate, when the invested capital of many investors is used to purchase income property or to manage it. REITs are traded on the majority of major stock exchanges, and are treated just like stock, but receiving special tax status and consideration, and offering several benefits for ownership of property.