Editing Income trust (section)

==Types==
<!-- Deleted image removed: [[Image:IncomeTrust-structure.gif|right|thumb|550px|Simplified income trust structure. This example uses a corporation as the operating entity, but the trust may also use an operating trust or a limited partnership as the operating entity. (Source: [http://www.fin.gc.ca/activty/pubs/toirplf_1e.html Canadian Department of Finance].)]] -->
There are four primary types of income trusts:

===Investment===
[[Investment trust]]s (aka "[[mutual funds]]") are trusts established for communal investment in securities, encapsulated under the umbrella of a flow-through entity and typically managed by a 'fund sponsor', usually an investment firm, asset management firm, or investment bank. These trusts invest in a variety of investments including stocks, bonds, futures, etc., and are often marketed to the public directly when authorization has been received from provincial securities regulators to do so. This type of trust has not been affected by the recent changes in Canada concerning income trust taxation; like Canadian REITs, mutual fund investment trusts have been exempted from taxation. Some investment trusts have been specially structured with [[leverage (finance)|leverage]] in order to amplify cash yields paid to investors, while others deplete their assets to pay distributions to investors on a regular basis.

===Real estate investment===
[[Real estate investment trust]]s (REITs) invest in [[real estate]]: income-producing [[real property|properties]] and/or [[mortgage-backed security|mortgage-backed securities]]. The REIT structure was designed to provide a similar structure for investment in real estate as mutual funds provide for investment in stocks.

===Royalty/energy===
[[Royalty trust]]s, "resource trusts" or "energy trusts" exploit [[natural resource]]s such as [[oil well]]s. The amount of distributions paid will vary from time to time based on production levels, commodity prices, royalty rates, costs and expenses, and deductions.

===Business===
Business income trusts are individual companies that have converted some or all of their stock equity into an income trust [[capital structure]] for tax reasons. Business income trusts are used in many sectors, such as manufacturing, food distribution, and power generation and distribution. They are not [[investment trust]]s in the classic sense, since they represent a single company's assets and not a pool of investments.

Among business trusts, utility trusts that invest in or operate [[public utility|public utilities]] such as [[electricity distribution]] or [[telecommunication]]s are sometimes put in a separate category as they are inherently less growth-focused.<ref>[http://www.investcom.com/incometrust/whatis.htm ''InvestCom'']</ref>

In the US, the business trust structure typically takes the form of publicly traded partnerships (PTPs) or [[master limited partnership]]s (MLPs), essentially [[limited partnership]]s (LPs) with units that trade on public securities exchanges.<ref>{{cite web|url=http://www.ptpcoalition.org/PTPFAQs.htm|title=Coalition of|archive-url=https://web.archive.org/web/20050831010727/http://www.ptpcoalition.org/PTPFAQs.htm|archive-date=2005-08-31|access-date=2005-10-17|url-status=dead}}</ref> Those were very popular in the mid-1980s but are rare today. Revised IRS tax treatment of MLPs made the structure inefficient and infeasible, in light of the special tax that is levied on MLP owners who hold them in tax-deferred or exempt accounts such as [[401(k)]]s, [[individual retirement account|IRA]]s, and [[Roth IRA]]s. A more recent alternative called income depositary shares (IDS) has also failed to attract investor attention due to the trust activity being focused on the Canadian market.