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Royalty trust

A Royalty Trust is a type of limited partnership formed to gain tax advantages, usually invested in assets like crude oil, gas production, timber, iron ore, or real estate.

Expanded Definition

Royalty trusts are noted for their high yield as unit payments (they aren't dividends), which are partially protected from income taxes by depletion. The unit payments on US royalty trusts are not qualified dividends. The unit payments on Canadian royalty trusts are qualified (but their value changed sharply recently as Canada changed their tax requirements on these securities).

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