Although Freedom Checks might sound like a federal program, it isn’t run by the government. However, this tax-free investment opportunity wouldn’t exist without a federal law known as Statute 26-F. It enables more than 550 energy-related businesses to send generous quarterly or monthly checks to their investors.
These firms are called master limited partnerships. They play a variety of roles in the natural gas and oil industries. The MLPs operate refineries, transport fuel through pipelines and drill new wells. To qualify for a special tax exemption, they must give investors 90 cents of every dollar in earnings. Read this article at Money Morning.
These Freedom Checks resemble dividends, but most MLPs refer to them as “distributions.” Some shareholders receive up to $160,000 every quarter. The Motley Fool and Reuters have highlighted the impressive returns that these investments offer. Traditional securities typically pay 50 to 67 percent less.
The federal income tax doesn’t apply to MLPs or their shareholders. Investors pay a comparatively small tax on capital gains if they sell their shares. These policies give Americans a major incentive to invest in the energy sector.
Why does the government let MLPs avoid taxes? President Nixon believed that the United States needed to maintain its independence by producing more energy. Consequently, he promoted the creation of a law that would reward people for investing in domestic gas and oil producers. Read more at Release Fact.
The Freedom Checks concept also encompasses a few similar opportunities. For instance, real estate investment trusts provide another tax-free option. Nine-tenths of their income goes to shareholders. Many REITs earn money from rental properties that they own.
Although a larger investment is necessary to receive hundreds or thousands of dollars each month, Americans can start buying shares with $50 or $100 in spare cash. Financial guru Matt Badiali writes a newsletter that highlights the most lucrative tax-free investments.