An Investment Discovery by Matt Badiali: Freedom Checks
Tax classification for an organization can have a tremendous impact on their overall tax liability. In an effort to spur the development of the domestic oil and natural gas industries in the 1980s Congress passed a piece of legislation that created a new tax classification for organizations that operated in this industry. The piece of legislation is known as Statute 26-F, and it created the tax classification which is known as master limited partnerships. Learn more about Freedom Checks at Release Fact.
Corporations which operate as a master limited partnership are able to operate entirely tax-free. This means that no portion of their income is subject to tax. It is evident that there are huge incentives for a corporation to meet the qualifications set forth by Statute 26-F in order to qualify as a master limited partnership. The qualifications are relatively simple, but the implications are incredibly tantalizing for American investors.
In order to qualify as a master limited partnership, a corporation must meet two prerequisites. First, the corporation must generate 90% of its revenue from the production, processing, storage, and transportation of oil and or natural gas domestically within the United States of America. In addition to the requirements regarding the source of a companies revenue, there is a requirement for these corporations to also pay out a portion of these revenues to its investors. While this at first may seem to be the same as dividends that are paid out by corporations in the conventional stock market, there are a few key differences.
These payouts are considered as a return of capital and not personal income. In the traditional stock market dividends are treated as personal income. Due to their treatment as personal income that they are subject to the higher rate of tax, personal income tax. The payouts from master limited partnerships, popularized as Freedom Checks by Matt Badiali, are treated instead as a return of capital. Because these payouts are treated as a return of capital they are only subject to the much lower capital gains rate of tax. Watch this video at youtube.
Matt Badiali upon discovering this unique investment device quickly made a video in order to inform the public that went viral. In this video, he describes these payouts as Freedom Checks. This is a catchy term that has drawn in a much wider audience than if he had used dry language that is typically used by investment advisors. Matt Badiali is a natural resource expert for the Banyan Hill Publishing Company.