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- Investors are paid first, before salaries, vendors, taxes, or
anyone else. This is obviously not the case in a debt or equity situation. The RLP has a
double lock-box system, that insures this benefit.
There is no dividend
taxes that dilutes their return by up to 39%. This feature increases dramatically the
R.O.I. per annum.
An investor in a Royalty
Limited Partnership has limited liability. The investors liability is limited to the
amount of their investment. This is not the case in equity investments.
A RLP will afford a very
high R.O.I. to the investors, that is generated from savings as a result of their
participation. No other structure can produce this high rate of a return without creating
offsetting risks of insolvency.
The RLP is an asset
backed security. In most cases, 80% or more of the investors investment, is backed by the
assets of the RLP. In the event of a catastrophe, the OGP could do one of two things, 1.)
Liquidate the assets and distribute the resulting funds on a pro-rata basis to the limited
partners; or 2.) Enter into a Use contract with another company for another
income stream. In any case, there will not be a forced sale as a result of foreclosure. It
can be done, but it is very difficult to declare bankruptcy if you have no debts or liens
The limited partners can
convert their RLP interests to public stock whenever the OGP says the time is right. The
main exit strategy for most companies and CEOs, is to go public. The RLP is the
perfect Pre Public offering to posture companies for going public. In the
meantime, the investor enjoys a healthy R.O.I. per annum.
RLP income is passive
income. Investors with passive losses carried forward on their returns, may use up their
losses and enjoy, to the extent of their losses carried forward, tax free income.
Depreciation of assets of the RLP, once set up on a depreciation schedule are passed
directly through to the investors, along with any form of income. This is done annually on
a K1 tax form.
RLP interest enjoys a
much better potential for a secondary market, because, it represents a positive, monthly,
cash flow that once seasoned, anyone would be interested in it on a discounted
accounting on hidden expenses. The only on going cost of participation is the bonded
CPAs fees. This is a major benefit, and can only be appreciated by those who were
taken advantage of during the tax shelter era.
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