By just looking at the name, it appears that Freedom Checks are issued by the government, but it is not. It is not even a federal program and is not under the auspices of the government. But without a certain federal law, this investment opportunity, which incidentally is tax free, will not see the light of day. The Statue 26-F is the federal law that allows over 550 energy centered businesses to provide generous monthly or quarterly Freedom Checks to their respective investors.
These commercial entities are known as master limited partnerships. They perform different functions in the oil and natural gas industries. A number of these MLPs run oil refineries, drill new oil wells, and transport fuel through their pipelines. To be able to get the special tax exemption, these MLPs must allocate 90 cents of every dollar in profits to their investors. Learn more about Freedom Checks at dailyreckoning.com.
By virtue of their nature, the Freedom Checks are similar to dividends. However, a majority of the MLPs regard them as “distributions.” There are shareholders who get a maximum of $160,000 every quarter. The remarkable returns that were generated by these investments were highlighted by Reuters and the Motley Fool saying that the typical returns of traditional securities are paying less than 50 to 67 percent.
The MLPs and their shareholders are not required to pay federal income taxes. Compared to income tax, this type of investment is only required to pay a small capital gains tax if the investors sell their shares. Such policies are established to attract Americans to invest their money on the energy industry.
What is the real reason that the government allows these MLPs to skirt taxes? It is the firm belief of President Richard Nixon, during his time, that the country needed to sustain its independence by generating more energy. As a result, he advocated for the formulation of a law that will reward American citizens who will invest their money on domestic oil and gas producers.
The idea behind the Freedom Checks also included a number of similar investment opportunities. An example is the tax free option offered by real estate investment trusts. About nine tenth of the income in this sector goes to their shareholders. In addition, several REITs gain profit from the rental of their properties.
While larger investments are required to get hundreds of thousands of dollars every month, American citizens can begin purchasing shares if they have $50 to $100 extra cash. For investors who are searching for the most profitable tax free investments today, they can read the newsletter of Matt Badiali, a financial expert.