Is a structured installment sale legal?
Yes. Reporting gain as payments arrive is the installment method, in the tax code since the Revenue Act of 1926 and now IRC §453, with IRS Pub 537 and Form 6252 explaining how. What has no published IRS ruling is the specific step where an assignment company takes over the buyer's obligation. Your CPA or tax attorney should review that.
Buyer cash → Assignment Co. → fixed annuity → You, on schedule
Hans Goldstein structures installment sales for sellers and works alongside their CPAs. Email hans@goldsteinco.net or call 213-340-2018.
What part of the law is settled?
The installment method itself. Congress added it to the code in the Revenue Act of 1926 and rewrote it in the Installment Sales Revision Act of 1980, which shaped today's §453. The core rules:
- An installment sale is a disposition where at least one payment is received after the close of the tax year of the sale (§453(b)(1)).
- Gain is reported as payments are received, using one gross profit ratio for every payment (Temp. Treas. Reg. §15a.453-1(b)(2)).
- You report it on Form 6252 in the year of sale and each year a payment arrives. IRS Pub 537 walks through the math.
- Some property is excluded: dealer property and inventory (§453(b)(2)), and publicly traded stock and securities (§453(k)(2)).
- §1245 recapture is taxed in the year of sale even with no cash received (§453(i)).
None of that is novel. Seller-financed sales have used it for decades.
What part has no published ruling?
What is the tax bill on your sale going to be?
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.
In a structured installment sale, the buyer pays the full price at closing, and the deferred portion goes to an assignment company that takes over (assumes) the buyer's obligation to make the payments. The assignment company funds that obligation with a fixed annuity it buys from a highly rated life insurer. The seller never owns the annuity.
There is no published IRS ruling that approves this assignment structure for an installment sale, and no published guidance on whether swapping the obligor is a disposition of the obligation under §453B. Say that plainly to anyone who asks. The usual practice is to write the assignment into the original sale terms before closing, so the seller never had a right to the cash, and to have the seller's own CPA or tax attorney review the documents.
The structure also has to respect constructive receipt (Treas. Reg. §1.451-2(a)). That is why the schedule is locked: no acceleration, no cashing out, no borrowing against it.
How is it different from a monetized installment sale?
A monetized installment sale pairs an installment note with a loan to the seller, so the seller gets most of the cash up front while claiming deferral. In 2023 the IRS proposed regulations identifying monetized installment sales as listed transactions (REG-109348-22). Listed transactions carry disclosure duties and penalties.
A structured installment sale involves no loan to the seller. You receive the scheduled payments and nothing else. You also cannot pledge the right to them: under §453A(d), pledging an installment obligation (sale price over $150,000) as loan security treats the loan proceeds as a payment. See the monetized installment sale warning.
How is it different from a deferred sales trust?
In a deferred sales trust, the seller sells to a trust, the trust sells the asset and invests the proceeds, and the trust pays the seller on an installment note. The seller's payments depend on the trust and how its investments perform.
In a structured installment sale there is no trust and no investment account. The payments come from an assignment company funded by a fixed annuity, on a schedule set before closing. The comparison is laid out in deferred sales trust vs structured installment sale.
Frequently asked
Q: Has the IRS approved structured installment sales? A: The installment method is settled law. The assignment structure itself has no published IRS ruling approving it. Have your CPA or tax attorney review the documents before closing.
Q: Is a structured installment sale a listed transaction? A: No. The 2023 proposed regulations (REG-109348-22) target monetized installment sales, which involve a loan to the seller. A structured installment sale has no loan.
Q: How does it get reported? A: On Form 6252, in the year of sale and each year you receive a payment. Interest on the payments is reported separately as ordinary income.
Q: Can I set one up after closing? A: No. It must be in the contract before closing. Once the buyer's cash is yours, the sale is a cash sale.
What should you read or run next?
- What is constructive receipt?
- Is a structured installment sale safe?
- Related-party installment sale rules
- IRC Section 453
- Monetized installment sale warning
- Deferred sales trust vs structured installment sale
- Form 6252 calculator
- All structured installment sale questions
Who wrote this?
Find out what your sale is really going to cost you in tax, and what you can do about it
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.
Send me the sale price and roughly what you paid. Within one business day I’ll come back with the number you’re actually looking at and whether a structured installment sale can push it down. If it can’t, I’ll say that just as plainly.
You'll also get the plain-English Seller's Guide to §453: the math, the alternatives, and the cases where it does not work.
📞 Hans Goldstein · 213-340-2018 · 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.
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 → 213-340-2018