If your CPA hears "installment sale tax planning" and worries it's the audit-magnet structure they've read about in IRS warnings, they're thinking of deferred sales trusts and Monetized Installment Sales. Those are different products with different legal foundations. The SIS is built on the installment method of IRC §453 (rewritten in 1980). The differences are laid out below.
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.
Seller financing and a structured sale both use §453, with different risks: the buyer’s default or early payoff on one side; an open legal question, an unsecured and locked payment stream on the other. See the risks of each, side by side.
The SIS keeps the §453 spread-tax benefit of the old installment sale and removes 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, and the rest goes to the assignment company, which immediately buys a fixed annuity from a highly rated life insurer to fund your payments. The assignment company becomes the obligor.
Send me the sale price and rough basis. Within one business day I'll email you the actual number and the Seller's Guide to §453. If it doesn't fit your deal, I'll tell you that plainly.
No retainer · no obligation. Hans Goldstein, a licensed insurance agent (CA Insurance License #4273294), will contact you and may discuss insurance products, including annuities.
Several different "installment-sale-style" tax structures get pitched to high-net-worth sellers. They look similar from the outside, but they have completely different legal foundations. Some rest on settled statute. Some are listed-transaction audit magnets.
| Structure | Tax Code | IRS Position | Funded By | Seller Control |
|---|---|---|---|---|
| Structured Installment Sale (SIS)This calculator | IRC §453 | ✓ In the Code Installment method of §453 (rewritten 1980); no IRS ruling specifically approves the assignment structure |
Assignment company (funded by a fixed annuity from a highly rated life insurer) | No constructive receipt |
| Deferred Sales TrustNo code section | None (relies on §453 by analogy) | ✗ Challenged No published IRS approval; exposed to constructive-receipt and economic-benefit attacks |
Trust holds property + sells | Trust controls funds |
| Monetized Installment Sale (MIS)CCA 202118016 · REG-109348-22 | Strained §453 + §752 | ✗ PROPOSED LISTED TRANSACTION (2023) IRS Chief Counsel says it does not work as promoted; disclosure required if the rule is finalized |
Loan-backed installment note | Effective receipt via loan |
| Charitable Remainder Trust (CRT)IRC §664 | IRC §664 | ✓ Codified Same law Stanford / Harvard / hospitals have used for 60+ years |
Irrevocable trust holds + manages | No reclaim, remainder to charity |
| 1031 Like-Kind ExchangeIRC §1031 | IRC §1031 | ✓ Codified Real estate only since 2017 TCJA; common practice |
Qualified intermediary holds proceeds | Limited (must reinvest 180d) |
| Delaware Statutory Trust (1031)IRC §1031 fractional | IRC §1031 | ✓ Codified Not to be confused with a Deferred Sales Trust (a completely different product) |
Delaware statutory trust sponsor holds fractional interest | Locked 5-10 years |
The buyer at closing assigns the obligation to pay the seller's installments to a third-party assignment company, usually affiliated with a highly rated life insurer. The assignment company funds the obligation immediately by buying a fixed annuity with a lump sum from escrow, and owes the seller the payments per the schedule. The seller is an unsecured creditor of the assignment company.
The seller doesn't hold the funds. The seller doesn't have constructive receipt. The seller has no economic relationship to the buyer after closing. The buyer is fully discharged. This relies on IRC §453 installment-sale treatment: the same code section any farmer selling on installment to a neighbor uses.
What your CPA should check: the installment method itself is ordinary §453. The newer piece is the assignment: an assignment company, funded by a fixed annuity from a highly rated life insurer, takes the buyer's place as obligor. That removes buyer credit risk, but your payments then depend on the assignment company and the insurer behind its annuity. No IRS ruling specifically approves the assignment structure, so have your own CPA or tax attorney review the documents.
A promoter sets up an irrevocable trust. The seller "sells" the property to the trust in exchange for an installment note. The trust then sells the property to the actual buyer and pays the seller per the note schedule. The seller claims §453 installment treatment based on the seller-to-trust sale.
The problem: the IRS argues the seller has effective control over a trust they set up for their own benefit, and that the "sale" to the trust isn't a real arm's-length transaction. Multiple Tax Court cases have ruled against deferred sales trust promoters. The trust's assets, the trustee's role and the seller's beneficial interest all invite scrutiny.
Specific issues: the trustee is often picked by the promoter, not independent. Trust assets are sometimes invested in vehicles benefiting the promoter. Trust mechanics often blur the line between "trust holds funds" and "seller controls funds." There's no statutory authority for the structure. It's a clever theory, not codified law.
The seller does a §453 installment sale (often through a promoter-run vehicle), then immediately takes out a non-recourse loan against the installment note for ~95% of the sale value. Functionally, the seller has the cash today but claims §453 deferral on the gain. The IRS calls this what it is: monetization of the deferral.
In August 2023, Treasury and the IRS proposed regulations (REG-109348-22) that would identify Monetized Installment Sales as a "listed transaction" under Treas. Reg. §1.6011-4. If finalized, every taxpayer using one files Form 8886 disclosing the transaction and every material advisor files Form 8918. IRS Chief Counsel had already concluded, in CCA 202118016, that these deals lack genuine indebtedness and that the loan is effectively secured by the cash escrow, so the seller has received the money.
If you've been pitched a "monetized installment sale" or any §453 structure where you get a loan against the note, stop and consult a tax attorney before signing. The IRS's own Chief Counsel analysis says the deferral does not hold, and a note secured by cash is treated as payment under Treas. Reg. §15a.453-1(b)(3)(i).
A completely different structure that uses charitable trust law instead of installment-sale mechanics. The seller donates the appreciated property into an irrevocable trust. The trust sells the property tax-free (because it's a charitable trust). The trust pays the seller (or other beneficiaries) an income stream for life or a term of years. Whatever's left at the end goes to charity.
Why this is safe: CRTs were codified in 1969 under IRC §664. Stanford University, Harvard, the Mayo Clinic and operating charities across America have accepted CRT-funded gifts for decades. The IRS has clear regulations governing CRUTs (unitrusts) and CRATs (annuity trusts). There's no ambiguity about whether they work. They do.
The tradeoff: the remainder goes to charity. If you don't want to make a charitable gift, the CRT isn't your tool. But for sellers with even modest charitable intent (or those willing to use a wealth-replacement life insurance policy to restore the family wealth via the death benefit), the CRT often beats every other structure on after-tax math.
Yes, but there are TWO different trusts with the same initials, and they're completely different products. It is one of the most common mix-ups in sale planning.
A real-estate investment vehicle where multiple investors hold fractional interests in a pool of properties. Used as a 1031 exchange replacement property for sellers who want passive real estate exposure. Can qualify as §1031 replacement property when structured as described in Rev. Rul. 2004-86; the ruling covers only trusts that follow its restrictions. Widely used. 3-5% upfront sponsor fees are the main downside, plus illiquidity.
A trademark-protected promotional structure marketed as a §453 deferral vehicle. No connection to Delaware Statutory Trusts whatsoever. The name overlap is deeply unfortunate and intentionally misleading. Multiple Tax Court losses. Office of Chief Counsel guidance against it. If you've been pitched a "Deferred Sales Trust" to defer your sale gain, that's the one to avoid.
Practical test: if the structure your CPA or an advisor is describing involves fractional real-estate ownership, they mean the legitimate Delaware Statutory Trust. If it involves a trust holding the proceeds of your sale and paying you in installments, that's the audit-magnet Deferred Sales Trust. Different products. Different outcomes.
Beyond the deferred sales trust and the MIS, the §453 SIS gets confused with at least a dozen other tax-planning structures. The table below lets advisors rule each one in or out.
Every citation below is publicly available on irs.gov, the U.S. Code, or the Cornell LII. If your CPA or attorney wants the source documents, hand them this list.
Beyond the deferred sales trust and MIS, these are other promoter-marketed structures the IRS has actively challenged. If a salesperson pitches any of these as an alternative to a §453 SIS, walk away, and consider whether your CPA and attorney are appropriately licensed for the specific structure.
The most common “Deferred Sales Trust” pitch goes like this: “Your sale proceeds go into a trust, the trustee invests them in a diversified portfolio, and you get paid monthly from the investment returns.”
That sounds reasonable until you read the fine print. The trust’s ability to pay you depends entirely on how its investments perform. If the trustee invests in equities and the market drops 40% in a year (like 2008 or 2022), the trust doesn’t have the assets to pay you anymore. Your “guaranteed installment” isn’t guaranteed by anyone.
In a §453 Structured Installment Sale, the assignment company owes the payments and funds them with a fixed annuity from a highly rated life insurer, not a discretionary investment portfolio. Market performance does not affect your monthly check. Your payments do depend on the assignment company and the insurer behind its annuity; they are not FDIC insured, and you should not count on guaranty association coverage.
A properly funded SIS = sale proceeds wired at closing directly to a third-party assignment company that immediately purchases a fixed annuity from a highly rated life insurer. An improperly funded structure = proceeds held by a trust/escrow with the seller as beneficiary, then later “invested” in an annuity or portfolio. The IRS can challenge the latter as constructive receipt, collapsing the §453 deferral and taxing the seller on the full gain in Year 1.
If yes → SIS. If "no, we use a trust" → deferred sales trust. Run.
If yes → Monetized Installment Sale. IRS Chief Counsel says it fails; proposed listed transaction. Walk away.
Acceptable answers: IRC §453 (SIS), IRC §664 (CRT), IRC §1031 (LKE / Delaware statutory trust fractional). Unacceptable: "well, it's based on §453 by analogy" or "there's case law that supports it." If the answer isn't a clean code section, ask a tax attorney before signing anything.
The SIS uses straight IRC §453 the same way installment sales have worked for a century. Different code, different risk. I'm happy to walk your CPA through it directly. Most are relieved within the first 10 minutes, once they see the carrier-assignment structure is nothing like a deferred sales trust.
Call Hans · 213-414-2808 CPA Briefing Page →
A plain-English guide for sellers on how a structured installment sale defers the tax when you sell a business, practice, or property. It covers the math, the alternatives, and how to tell if your deal fits.
Leave your details and the PDF downloads right away. Within one business day Hans will email a preliminary read on which structure fits your deal. No retainer. On a funded structure, the insurer pays a one-time commission of about 4% of the amount structured to the brokerage firm that places it (Hans’s share is about 2.4%; no trail). It is built into the annuity pricing, not a separate fee.
📞 Hans Goldstein · 213-414-2808 · CA Insurance License #4273294 · Independent §453 specialist · Goldstein & Co. LLC
Hans Goldstein, a licensed insurance agent (CA Insurance License #4273294), will contact you and may discuss insurance products, including annuities.
