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Finance Glossary

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Conduit Theory

Definition:

If you try really, really hard, you conduit. Sorry, we couldn't resist. Conduit Theory relates to the tax treatment of an investment company - the basic idea is that if the vehicle passes through 90% or more of its net income to its shareholders, then it won't be taxed on its income; instead, the income (and losses, if any) will be attributed directly to the investors.

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