A Structured Installment Sale (SIS) is an installment sale under IRC §453 where an assignment company takes over the obligation to pay the seller over time, funded by a fixed annuity from a highly rated life insurer, spreading capital-gains recognition across years.
By Hans Goldstein, EA, Tax & Exit Planning · Updated
Admitted to practice before the IRS.
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.
They don’t earn less. They control when the money shows up. Take a big gain in small, scheduled pieces and you never have a giant income year. The IRS only taxes money once it’s actually yours to take. That’s all a Structured Installment Sale is.
This is for you if:
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.
You pay the tax as the cash actually arrives, on a schedule you design, not all in one hit.
The money you haven’t been taxed on keeps working at a steady, fixed, bond-like return from a fixed annuity issued by a highly rated life insurer, every year until it’s paid out.
The payout rate is locked at funding. Payments depend on the assignment company and the claims-paying ability of the insurer behind its annuity. Illustrative.
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.
| Question | Traditional installment sale | Structured Installment Sale (SIS) |
|---|---|---|
| Who owes the seller the payments? | The BUYER | The ASSIGNMENT COMPANY (funded by a fixed annuity from a highly rated life insurer) |
| When does the buyer pay? | Monthly to seller for 10-30 years | Full cash at closing (just like any normal sale) |
| If buyer defaults? | Seller stops getting paid (buyer-default risk) | N/A. The buyer already paid in full. The assignment company owes the seller, not the buyer. |
| Credit risk? | Depends on the buyer’s creditworthiness | Payments depend on the assignment company and the insurer behind the annuity; not FDIC insured; don’t count on guaranty association coverage |
| Tax treatment | §453 installment method | §453 installment method (same code section, same Form 6252 reporting) |
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. The assignment company becomes your obligor.
A Structured Installment Sale (SIS) is an installment sale under IRC §453 (the installment method, rewritten in 1980) where a third-party assignment company assumes the buyer’s obligation to pay the seller over time, funded by a fixed annuity from a highly rated life insurer, spreading the capital-gain recognition across multiple tax years instead of stacking the entire gain in Year 1.
The seller is paid on a fixed schedule by the assignment company, funded by a fixed annuity it owns (typically over 5-40 years). The seller is an unsecured creditor of the assignment company. The buyer pays cash at closing as in any normal sale. Escrow closes on the normal timeline. The only difference is one extra document at closing: the assignment agreement.
In a traditional seller-financed installment sale, the BUYER owes the seller the deferred payments, which creates risk: if the buyer defaults, the seller loses the income stream. The SIS solves this by inserting a third-party assignment company as the obligor:
Result: the seller’s income stream no longer depends on the buyer’s creditworthiness (it depends on the assignment company and the insurer behind its annuity), the §453 installment treatment is preserved, and the buyer walks away with no ongoing obligation.
Section 453 (the installment method) is the tax rule: when you are paid over time, you report the gain as the payments arrive. There are two ways to be paid over time. The tax math is the same; the risks are not.
| Seller financing (carry-back note) | Structured installment sale | |
|---|---|---|
| Tax rule | §453 installment method | §453 installment method, if the structure holds |
| Legal footing | Settled: the textbook installment sale | A reasoned position; no IRS ruling specifically approves the assignment structure |
| Who owes you | The buyer | An assignment company, funded by a fixed annuity it owns from a highly rated life insurer |
| Security | Deed of trust on the property | None: you are an unsecured creditor of the assignment company |
| Buyer default | Possible: foreclosure, bankruptcy stay, repossession | None: the buyer is out at closing |
| Buyer pays off early | Possible: the remaining gain is taxed at once | Not possible |
| Cash early if you need it | Sell or pledge the note, and the deferred gain is taxed at once (§453B, §453A(d)) | No cash-out, loan, pledge or acceleration |
| Rate | Usually higher | Usually lower |
| Servicing | You | None |
| Commission | None | Built into the annuity pricing |
Which risks you would rather hold is your decision. Review it with your own CPA and attorney before closing.
The SIS is not a separate transaction tacked on later. It is the structure inside which the sale itself happens. The full timeline, from listing to the first carrier payment:
Hans + escrow officer draft the SIS assignment addendum.
Buyer signs the PA with the SIS as a condition of the sale.
Normal escrow timeline. Title records to buyer at close.
Assignment company receives the wired funds, immediately buys a fixed annuity it owns from a highly rated life insurer. The assignment company becomes the obligor on the future periodic payments.
The seller is paid monthly or annually for the full term.
Once escrow opens with the seller as the obligee on a normal lump-sum sale contract, the seller is in constructive receipt of the full sale price for IRS purposes. Inserting an SIS assignment after that point doesn’t qualify for §453 treatment. The IRS treats the proceeds as already received.
The fix is to draft the SIS assignment into the original Purchase Agreement as a condition of the sale. The buyer signs the standard PA plus a one-page SIS assignment rider. For the buyer, the cash, the timing and the funding all stay the same. The only addition is one signature acknowledging that the wire splits at closing.
More SIS deals die in this conversation than anywhere else. The seller mentions "structured installment sale" to the buyer late in the process, the buyer panics about "what is this weird thing", and the deal falls apart over a misunderstanding. What the buyer is actually asked to do:
What the buyer is not doing:
When framed correctly in the original contract, the SIS assignment is invisible to the buyer’s experience. The buyer sees the same wire, the same recording, the same title transfer they would in any sale. The structure happens entirely between the assignment company, the carrier, and the seller, after the buyer’s wire lands.
If your property is already in escrow on a standard lump-sum contract, it is too late for the SIS on this sale. Call before you list. Or before you sign the Purchase Agreement. Never after escrow opens.
The structural advantage on a typical California sale of appreciated property:
Same $2M sale. Same total dollars to the IRS (close to it). Wildly different shape on your year.
This is what bracket compression can look like in practice. The roughly 12-point effective-rate reduction on $2M of gain shows up as the difference between facing a ~$740K bill in March and a ~$25K bill once a year for 20 years. Actual outcomes depend on your bracket, deal terms, and tax law at recognition.
The annuity is a fixed annuity (not variable or indexed), issued by a highly rated life insurer and owned by the assignment company. The specific insurer, its ratings and the contract terms are identified in writing before you sign anything, based on the seller’s term, start date, and yield preferences at the time of structuring.
Your payments depend on the assignment company and on the insurer behind its annuity. Payments are not FDIC insured, and you should not count on state guaranty association coverage.
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.
The tax-deferral story is the headline. These three are the ones sharp CPAs and estate attorneys mention only when you specifically ask.
Annuity payments enjoy partial-to-full creditor protection in most states. California exempts annuity payments up to ~$10,000/month under CCP §704.100, and federal BAPCPA provides bankruptcy-side protection.
A $2M lump in a brokerage account is fully attachable in a judgment. The same $2M structured as SIS payments is largely judgment-resistant. Big for doctors, business owners, anyone with professional-liability exposure.
Cash sale → after-tax proceeds typically land in a managed brokerage at ~1% AUM. On $2M, that's $20K/year in fees, or roughly $500K over 25 years.
SIS pays you on a contract schedule from a carrier. No AUM fees, no investment-selection decisions, no rebalancing, no fund expense ratios layered on. Once the contract is issued, the ongoing fee is zero.
SIS payments are not "earned income" for the Social Security earnings test. A 62- to 69-year-old can collect SIS while delaying SS to age 70 for the 8%/year delayed-retirement credit.
Over a 30-year retirement, delaying SS from 62 to 70 increases lifetime benefits by ~$300K to $500K for the typical California seller profile. SIS provides the bridge income that makes the delay possible.
The most-asked question after “is the SIS guaranteed?” is this: “What happens if I die before the SIS term ends?”
The straight answer: the remaining payments go to your named beneficiaries (typically heirs or a trust), and each payment continues to be taxable to them as “Income in Respect of a Decedent” (IRD) under IRC §691. Unlike property held until death, the remaining SIS payments do NOT get a §1014 stepped-up basis. Heirs pay income tax on every payment they receive.
This is the one place where the SIS structurally loses to holding an appreciated asset until death. If you hold a $2M rental property until death, your heirs inherit at $2M stepped-up basis and can sell for $0 tax. If you have a 30-year SIS paying out $80K/yr and you die in year 5, your heirs receive 25 more years of payments, each one taxable to them.
For sellers who care about the heir-inheritance outcome, the standard solution is to layer a GUL (Guaranteed Universal Life) policy on top of the SIS. GUL is a permanent life insurance contract with a contractually guaranteed death benefit to age 121. It doesn’t depend on investment returns, and there is no cash-value gambling.
| Product | Best use | Why NOT for SIS heir replacement |
|---|---|---|
| Term insurance | Income replacement during working years | Expires at 80-85. Useless for late-life heir protection. |
| Whole life | Estate planning with cash accumulation | 3-4× more expensive than GUL for same death benefit (you pay for cash value you don’t need here). |
| Indexed UL | Performance-linked accumulation | Death benefit can lapse if returns disappoint. Not contractually guaranteed. |
| GUL (Guaranteed Universal Life) | Contractually-guaranteed death benefit to age 121 | THIS is the right tool. Cheapest way to lock in a specific death benefit amount. |
Underwriting standard: healthy 60-70-year-old gets “preferred” class GUL rates. Health conditions push toward “standard” or “substandard” rates. Most cases are still issuable, at a higher premium. The calculator’s GUL toggle estimates a preferred-class premium; actual carrier quote requires full medical underwriting.
Most sellers miss this: the SIS works because the full pre-tax sale price compounds inside the carrier contract, not the after-tax leftover.
On a $2M California sale with ~37% blended tax:
Advantage: ~$630K at the same yield. The SIS doesn’t need to outperform the cash side’s yield. It just compounds more starting principal. Bigger principal × same yield = more income, every year, for the entire term. No after-tax investment can replicate that math.
The advantage scales with: (a) the gain percentage (higher gain = bigger tax savings = bigger principal advantage), (b) the term length (more years of compounding amplify the gap), and (c) your marginal tax rate (higher bracket = bigger Year-1 tax = bigger after-tax shrinkage on the cash side).
The installment-sale method was codified in the Revenue Act of 1926 to solve a real problem for farmers: they were being taxed on income they hadn’t yet received. The Installment Sales Revision Act of 1980 rewrote the rules, and the 1980s structured-settlement industry built the assignment infrastructure. The assignment structure used in an SIS is much newer than §453 itself, and no IRS ruling specifically approves it, so have your own CPA or tax attorney review it. Full §453 history →
The calculator on this site runs your sale through real 2026 federal + CA tax brackets and shows the exact savings from §453 installment treatment vs a straight cash sale and vs a CRT.
Run the calculator → 213-414-2808Pros: the gain is taxed over years at lower brackets, the buyer pays in full at closing so you carry no buyer credit risk, payments are fixed when funded, and it can absorb 1031 boot so the deal closes. Cons: it is irrevocable, you cannot borrow against or speed up payments, §1245 recapture is due in year one, and payments depend on the claims-paying ability of the issuing insurer.
Yes, but over time. Each principal payment carries gain at your gross profit percentage, taxed at capital gains rates in the year received, while interest is ordinary income. Spreading the gain keeps more of it in the 15% federal bracket instead of 20%, can keep income under the NIIT and IRMAA thresholds, and in California lowers the bracket each year sits in.
You give up liquidity: once the annuity is funded the schedule cannot be changed, accelerated or pledged, because that is what keeps the tax deferral. Depreciation recapture on equipment and cost-segregated items is taxed in year one. Structures have minimum sizes, the rate is set on the funding date, and a commission is built into the annuity pricing.
Yes. When a seller takes cash out, trades down, or ends up with a mortgage mismatch, the boot is taxable in year one. Placing that boot into a structured installment sale spreads the tax on it, so the seller nets more and the exchange can still close instead of falling apart over the tax bill.
Sources: 26 U.S.C. §453 (Cornell LII); IRS Publication 537, Installment Sales; IRS: About Form 6252, Installment Sale Income. Checked October 3, 2026.
