An entity that mixes the advantages of a partnership with the liquidity of publicly traded securities represents a novel type of funding. These entities, structured as restricted partnerships or restricted legal responsibility corporations, provide pass-through taxation, that means earnings and losses move on to the person homeowners, avoiding company earnings tax. An instance is likely to be a pipeline operation structured to distribute earnings to its unit holders. This construction is enticing for companies with secure money flows and substantial depreciable property.
The enchantment lies within the potential for larger after-tax returns for buyers. The pass-through construction avoids double taxation. Moreover, they’ll present entry to sectors like power, actual property, and infrastructure that may in any other case be troublesome or costly to spend money on instantly. Traditionally, their emergence supplied an avenue for capital formation in sectors requiring important long-term funding.
