Capital-gains tax is a staircase, not a flat toll. Only the top slice pays the top rate — so how you time the gain decides how much lands on the top step. Bunch it into one year and the bomb goes off. Spread it, and most of it never touches 20%.
▼ $2,000,000 gain · two ways
$2,000,000 gain · MFJ · 10-year structure
Where does your gain land on the tax staircase?
State
Your income
▲ change them — watch the tax move
20% + NIIT + CA · TOP STEP15% zone0% zone
Sell outright ALL in Year 1
YR 1a payment every yearYR 10
35.6%
$712,000
gone to tax — in one year
25.1%
$502,000
over 10 years — $210k saved
A 4.5% guaranteed rate that grows your money like
9% a year*
— you never lost a third up front
GOLDSTEIN & CO. · IRC §453Structured Installment Sale
*You keep earning 4.5% on the full pre-tax amount and pay less tax each year, so the result works out like about 9%/yr. Orange = depreciation recapture (~$400k, taxed at 25%, comes out first). Gold = money kept. Illustrative — see notes.
In plain English
Two people sell for the same price. One pays the tax now. One defers with SIS. Here's the whole game — and exactly how the math works.
💵
Pay tax now, you only grow 65¢ of every dollar. Defer with SIS and the whole dollar keeps working. A dollar beats 65 cents — same rate, bigger pile.
⏳
At ~4% a typical $3,000,000 roughly doubles to $6,000,000 in about 18 years — the cash seller only doubles the smaller after-tax pile.
📈
Your full dollar stays working (not 65¢), and the gain is taxed in small yearly slices at lower rates. On a typical high-tax California sale that's about $1.29 kept for every $1 the pay-now seller ends up with — your exact number is up top. That's the whole trick.
What the calculator is actually doing
Where does the money go each year? You get a check, pay that year's tax, and we assume you reinvest what's left at the same rate. Nothing disappears — and the cash side reinvests the same way, so it's a fair fight.
Is the interest taxed? Yes — the interest/growth is taxed as ordinary income every year, on both the cash side and the SIS side.
Federal and California? Both — federal capital-gains + 3.8% NIIT + California income tax + the 1% surtax over $1M + 25% depreciation recapture. The whole stack.
IRC §453 · installment methodFunded by A-rated carriersSame law behind structured settlementsCA Lic #4322192
Engine 1 · pay less tax
Nobody pays one flat rate
Federal long-term gains climb in steps: your first dollars at 0%, the next band at 15%, and only the dollars stacked up top at 20%. Even sharp people in finance, law and real estate think being "in the 20% bracket" taxes the whole gain at 20%. It doesn't.
0%
First band ≤ ~$96,700
15%
Middle band to ~$600,050
20%
Top band only above ~$600k
+ 3.8% NIIT once income tops $250k+ up to 13.3% California
Lump it:~90% of the capital gain gets shoved onto the top step. Spread it:0% ever reaches it — every $200k/yr slice stays in the 15% zone and ducks NIIT.
The honest part
What §453 can't defer
▲ Depreciation recapture is carved out
If you depreciated the property, that recapture (~$400k in this example) is taxed at 25% and recognized first — it comes out in the early payments, and the spread can't lower that rate. Personal-property (§1245) recapture is worse: it's ordinary income, taxed entirely in the year of sale. Only the true long-term capital gain gets the bracket benefit above. Anyone who tells you SIS erases recapture is selling you a fantasy — this is why the real numbers still work, and why they're believable.
Engine 2 · grow the whole dollar
Every dollar works — not two-thirds
Sell outright and a third is gone before it can grow. Structure it, and the whole pre-tax dollar keeps compounding.
Sell outright
⅓ gone to tax
only ⅔ can grow
it doubles ↓
$1.29from every $1
§453 structured
the whole $1 keeps working
it doubles ↓
$2.00from every $1
Same 4.5% — but earned on the full pre-tax balance, not the leftovers. That's why it performs like a ~9% return.
Page 2
"Sounds too good to be true… right?"
It isn't a loophole. It's a 3-party structure built on the same law that's run structured settlements for 40 years. Here's the machinery.
1 · You, the seller
Take the price over time
Instead of one lump check, you elect to receive the proceeds as a fixed stream — here, 10 years at 4.5%.
2 · The buyer
Pays 100% cash & walks
This is not seller financing. The buyer funds the full price at closing and is completely out — no IOU owed to you.
3 · Assignment co. + insurer
Funds a fixed annuity
The obligation to pay you is assigned to a licensed third party, which buys a rated annuity to guarantee every payment.
↓ you receive the scheduled payments — and only those ↓
§ IRC §453 — the installment method
Congress wrote it: collect a sale price over time and you owe tax on the gain as each payment arrives — not all in year one. Black-letter law, not a trick.
✕ No constructive receipt
You never own or control the lump sum or the annuity — only the right to scheduled payments. Can't accelerate, assign, or borrow against it. You weren't handed the money, so you aren't taxed as if you were.
⚖ You're the payee, not the owner
The annuity is owned by the assignment company — you're a general creditor receiving payments. That separation of ownership from benefit is exactly what §453 requires.
★ Proven machinery
Identical structure to structured settlements (IRC §130) — decades old, IRS-recognized, funded by A-rated carriers. SIS just points it at a sale instead of a lawsuit.
So where's the catch?
You trade immediate access and control of the full lump sum for the tax spread plus a guaranteed income stream. That's a real economic cost — which is precisely why the IRS respects it. No free lunch. Just far better timing.
Don't pour 90% of your gain onto the top step. Lay it flat — and keep it growing.
That's the entire power of a §453 structured installment sale: a one-year tax bomb becomes a 10-year income stream, taxed a bracket at a time.
We didn't even get to your numbers.
We haven't touched your state's breakdown or how depreciation recapture really hits your deal. Drop your phone + email and I'll send your actual numbers — no pitch.
What is a Structured Installment Sale? You sell now, take the price across years instead of one lump, and the tax spreads out with it — legally, under IRS Code §453.
It is NOT seller financing — the buyer pays 100% cash and walks away at closing.
Backed by A-rated, Fortune 500 carriers (MetLife and others) — guaranteed payments.
IRS Code §453 — the same structure behind structured settlements for 40+ years. Not a loophole.
Turn a one-year tax bomb into a steady income stream — and keep six figures more.
✓ On its way by text & email. I'll follow up personally. — Hans