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Tax Efficient Positioning of Nontraditional Assets: REITs, MLPs, and ADRs  


Author:  Richard Toolson.


Source: Volume 33, Number 04, Summer 2016 , pp.35-46(12)




Journal of Taxation of Investments

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Abstract: 

Properly locating assets between retirement and taxable accounts increases the investor’s after-tax return. Real estate investment trusts (REITs), master limited partnerships (MLPs), and American depositary receipts (ADRs) offer potentially enhanced diversification benefits to the traditional stock portfolio. Because the tax characteristics of these asset classes are different from publicly traded C corporations, it is often problematic as to whether these asset classes should best be located in a retirement or a taxable account. This article addresses the core tax differences among these asset classes and whether they should be held in taxable or retirement accounts.

Keywords: retirement vs. taxable accounts, tax efficiency, asset location, real estate investment trusts (REITs), master limited partnerships (MLPs), American depositary receipts (ADRs)

Affiliations:  1: Washington State University.

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