§453 · Sell Plaintiff Pi Law Firm Defer Capital Gains

Selling Your Plaintiff PI Firm — Different From Deferring Attorney Fees

A note: this page is for selling the firm as a going concern. Deferring individual contingent fees on specific cases uses a different structure (*Childs v. Commissioner* — see [attorney fee deferral](/attorney-fee-deferral/)). The two structures stack.

§453 Mechanic — How the Money Flows

Buyer cash → Assignment Co. → A-rated carrier → You, on schedule

BUYER pays full cash at closing ASSIGNMENT CO. qualified entity, regulated purchases annuity A-RATED CARRIER A-Rated Carrier A+ rated · A.M. Best SELLER (you) paid on chosen 5-30 yr schedule Closing day — one wire, one assignment Gain recognized proportionally each year per IRC §453 (Treas. Reg. §15A.453-1)

If you're retiring from a plaintiff PI / mass tort practice — and you've built referral networks, case files in WIP, and a book worth $2M-$15M to another firm — §453 defers the capital gain on the firm sale across years.

The math — $5M plaintiff firm sale (going concern)

StateState rateLump-sum tax10-yr §453 taxDelta
California13.3% + 1%~$1.85M (37%)~$1.30M (26%)$550K
New York10.9%~$1.74M~$1.22M$520K
New Jersey10.75%~$1.73M~$1.21M$520K
Texas / Florida / Tennessee / Nevada0%~$1.19M~$0.83M$360K

Assumptions: $5M sale, mostly goodwill + case WIP. (PI firms aren't depreciated heavily — minimal §1245 recapture.)

Plaintiff-firm tax wrinkles

  1. Cases in WIP (contingent fee inventory). Work-in-progress on contingent cases is NOT a fully valued asset for tax purposes (no fee earned until contingency met). Valuation methodology matters.
  2. Co-counsel / referral receivables. Separately tracked.
  3. Mass tort book. Bellwether case posture, MDL position, settlement-fund-share entitlements — sophisticated valuations.
  4. Going-concern vs partner buyout. Solo selling out vs partner-buyout has different structuring. Equity vs asset deal.
  5. State bar rules on firm sales (e.g., ABA Model Rule 1.17, California Rule 1.17, similar). Practice purchase must comply.
  6. Open Childs deferrals at time of sale. Seller can structure their last contingent fees at exit. §453 firm sale + Childs fee deferral stack.

When this fits

  • $1.5M+ firm sale
  • Identifiable acquirer (another firm or entity)
  • Book transferable without losing material value

When it doesn't

  • Solo without transferable book
  • Sale under $1.5M

How I work

Hans Goldstein, IRC §453 specialist. I work with plaintiff PI attorneys on both firm sales and individual fee deferrals.

Frequently asked

Q: Can I structure both — the firm sale AND my last big contingent fee? A: Yes. Two separate §453 structures, two separate deferral streams. Common combination at retirement.

Q: What about state bar rules on firm sales? A: Most states have analogues to ABA Rule 1.17 governing sale of a law practice. We comply; the §453 mechanic is separate from the bar-compliance side.

Hans Goldstein, NPN 20602398

📘 Get the free Seller's Guide to §453 + a fit-check

A plain-English guide for sellers: how a structured installment sale defers the tax when you sell a business, practice, or property — the math, the alternatives, and how to know if your deal fits.

Drop your info — instant PDF download + within 1 business day Hans will email a preliminary read on which structure fits your deal. No retainer. Carrier compensates the broker — not you.

I agree to receive calls and texts from Hans Goldstein at the number provided. Msg/data rates apply. Reply STOP to opt out.

📞 Hans Goldstein · 317-463-6659 · CA Insurance License #4322192 · Independent §453 specialist · Goldstein & Co. LLC

Educational. Not tax or legal advice.

Run your specific numbers

The calculator runs your sale through real 2026 federal + state tax brackets and shows §453 savings vs lump sum side-by-side.

Run the calculator → 317-463-6659