conduit theory

Conduit theory

A theory that because investment companies are merely conduits for capital gains, dividends, and interest, which are in fact passed through to shareholders, the investment company should not be taxed at the corporate level.

conduit theory

The theory that states that because regulated investment companies merely act as conduits for the passage of dividends, interest, and capital gains to stockholders, these income items should not be taxed once to a company and again to the company's stockholders. If an investment company complies with certain federal regulations, the income is taxed only to the stockholders receiving the distributions. Also called pipeline theory. See also Subchapter M.
References in periodicals archive ?
By adopting agency theory, language conduit theory, and analogizing
evidence, language conduit theory shares the principles of agency theory
170) That language conduit theory was essentially similar to
Nazemian's holding--agency theory, language conduit theory, and
a hybrid of the agency theory and language conduit theory that predated
The doctrine can be applied by using the conduit theory, the step transaction doctrine or the economic substance doctrine.
The Service expanded the scope of the conduit theory in 1984 by disregarding (in two revenue rulings) the intermediary financial transactions of corporations located in a country with a reduced treaty withholding rate.
The IRS further expanded its application of the conduit theory in Letter Ruling (TAM) 9133004.