Which investment structure typically provides income with no corporate level taxation?

The correct choice, a REIT (Real Estate Investment Trust), typically provides income with no corporate level taxation due to specific tax benefits associated with its structure. Under the Internal Revenue Code, a REIT that adheres to certain requirements—such as distributing at least 90% of its taxable income to shareholders in the form of dividends—can avoid federal corporate income tax. As a result, income is taxed at the shareholder level only, allowing investors to benefit from a flow-through structure that enhances yield.

This tax-efficient structure encourages investment in real estate, making REITs attractive for income-focused investors. By distributing most of their income, REITs can convey their tax benefits directly to investors, which leads to increased cash flow.

In contrast, mutual funds, hedge funds, and closed-end funds can incur corporate taxation based on their structure, and while they might also distribute income to investors, they do not enjoy the same tax exemption at the corporate level as REITs do. Therefore, REITs stand out for their unique ability to provide investors with income without the burden of corporate taxation.