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The Role of Freedom Checks in Master Limited Partnerships

Freedom checks are any cash payments that come from publicly traded partnerships and are made to the shareholders. Some people think that freedom checks are a scam. That is not true. Sometimes, freedom check seems like a federal program. However, they are not run by the government. People who want to make use of this opportunity should know that this is a tax-free investment that is under the federal law known as Statute 26-F. The primary role of the freedom check is to help very many energy-related businesses in America to send checks to their investors either monthly or quarterly. The monthly or the quarterly freedom checks are almost similar to the traditional stock dividends. The only difference is that they are taken as a return of capital instead of income.

The energy-related businesses that have benefited from freedom checks are referred to as Master Limited Partnerships (MLPs). These firms have a unique tax structure that helps them to payout around ninety percent of their income to the investors and the shareholders. Not every company qualifies as a Master Limited Partnership. To be part of these partnerships, a firm must generate ninety percent of its income from activities such as production, transportation, and exploration of natural resources, mainly oil and gas. As mentioned earlier, the energy business has benefited more from the freedom check.

Using freedom check is very beneficial in terms of returns. With the increased use of freedom check, America has become a financially independent continent. MLP companies explore for new oil and gas wells and transport these natural resources across the extensive pipeline networks. They also refine oil and gas mainly coming from significant gas fields in the United States.

There are very many benefits that come from investing in MLPs. For instance, they are not required to pay federal income tax or the corporate taxes. This tax exemption allows the companies to retain more cash to payout to the shareholders and the investors. The freedom check means that investors looking for income can look for MPLs with attractive yields.

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