A big property or business sale, or a deferred attorney fee: instead of one giant check and a giant tax bill, a Fortune 500 insurer pays you like a pension. You keep more, it earns interest while you wait, and it’s legal because you never touched the lump sum.
Illustrative, not a quote. Based on a $2M capital gain for a high-income California seller: taking the lump sum costs roughly 20% federal + 3.8% NIIT + up to 13.3% California, about $700K of tax. Structuring it spreads the same gain across years at lower rates. Your figures will differ.
If that’s you, keep reading.
Probably not a fit if you need every dollar at closing, or your gain is under $500K. Top bracket every year regardless? Still a fit — you defer and earn yield on the pre-tax amount instead of the after-tax remainder.
Three words, three requirements. A Structured Installment Sale is a completed sale of an appreciated asset where the proceeds are paid to you as a guaranteed, scheduled income stream, so you’re taxed on each payment as it arrives instead of all in one year (IRC §453). Here is exactly what each word has to mean for it to be legal:
The “how”
The payments have to be structured through an annuity from a life-insurance company, not just an IOU from the buyer.
On paper, the buyer’s obligation to pay you is legally assigned to the insurance company (a signed assignment). The buyer pays cash at closing and walks away clean; the A-rated insurer takes over and guarantees every payment.
The “what”
You’re paid in installments, a pension-like stream, funded by an annuity that grows tax-deferred.
The money keeps working for you before tax, and you owe tax only on each installment as it lands, never on the whole amount in a single year.
The “why it’s legal”
It is a real, completed sale, but the documents have to be signed correctly, before you close.
The key rule is no constructive receipt: you can never have the right to grab the lump sum. The installment-sale and assignment paperwork must be in place so the money is never “yours to take”, and that is exactly what keeps the deferral valid.
Most explainers sell only the first. The second is the one that pays even if you’re in the top bracket every single year.
Spread the gain into years where you’re taxed at 15% instead of the top rate. Only works if you have low-income years. Always at the top? Skip this one.
The insurer pays you out of up to 100% of the pre-tax proceeds. Whatever you place earns a guaranteed, bond-like yield on every dollar the IRS hasn’t touched yet — for the whole term — and you’re taxed only as each payment arrives.
Engine #2 is the exact edge a 401(k) has over a taxable brokerage account: growth on pre-tax dollars compounds faster than growth on the after-tax remainder — because you never handed a third to the government up front. Already net $1M+ every year? →
Spread the gain over years and each year’s income stays low, so more of it is taxed at 15% and under the 3.8% line, not the top rate. That’s the third-to-a-quarter drop.
You pay the tax as the cash actually arrives, on a schedule you design, not all in one hit. The IRS waits until the money is yours to take.
An A-rated, Fortune 500 carrier pays you on a schedule you design, from your pre-tax proceeds, at a steady bond-like yield. The money you haven’t been taxed on keeps working every year until it’s paid out.
Illustrative. Assumes a ~$200K/yr spread against modest other income; your numbers depend on income, gain, schedule, and rates. Not tax advice.
The payout rate is locked at funding and backed by the carrier’s claims-paying ability. Illustrative, your numbers depend on the schedule and rates at closing.
Send me the sale price and rough basis and I'll email you the actual number within one business day — plus the Seller's Guide to §453. If it doesn't fit your deal, I'll tell you that plainly.
No retainer · no obligation · the carrier compensates the broker, not you. · SMS Terms & Privacy
It’s written in the tax code — IRC §453, on the books since 1980. Not a loophole. Not a scheme. (Settlements run on §104; attorneys on Childs.)
Your money comes from A-rated insurers, guaranteed. It does not depend on the buyer keeping a promise. A contract, not a handshake.
Don’t take our word for it. Hand this PDF to your CPA. They’ll confirm it in about ten minutes, the code sections are right there.
When most people hear “installment sale,” they think of the old-school version where the buyer pays the seller directly over time, like seller-financed real estate. That arrangement carries massive buyer-default risk for the seller and is NOT what the SIS does.
Bottom line: the SIS keeps the §453 spread-tax benefit of the old installment sale but eliminates the buyer-default risk. The buyer wires the full sale price to escrow on closing day, same as any cash sale. Escrow splits the wire per the SIS rider: any cash carve-out goes to you, the rest goes to the assignment company which immediately purchases an annuity from an A-rated carrier. The carrier becomes the obligor.
A California-licensed insurance producer (NPN 20602398) focused on one thing: placing the IRS-recognized structures that let sellers and attorneys spread a big tax bill over years instead of one. A-rated carriers only, and a straight “no” when your deal doesn’t actually fit.
213-340-2018 · [email protected]
