Pipeline Theory
A theory stating that an investment firm passing all capital gains, interest and dividends onto their customers/shareholders shouldn't be levied at the corporate level like most regular companies are. Also referred to as "conduit theory".
Investopedia Commentary
Basically the investment firm passes income (without taxing themselves) directly to the investors who are then taxed as individuals. This theory means investors are taxed once on the same income, whereas in regular companies investors are taxed twice. Both when the company reports income and when dividends are received. An example is a REIT or mutual fund company.
Related Links
An Overview Of After-Tax Balance Rules
See also: Conduit Theory, Corporate Tax, Income Tax, Investment Company, Investment Income, Investment Vehicle, Pipeline, Taxes
Also spelled: pipeline theories, pipe line theory, investment pipeline