A Structured Sale is a new tax management program that allows sellers of appreciated assets to invest before tax proceeds vs. after tax proceeds and control the receipt of such proceeds, thus the payment of taxes.
It works by enabling sellers to construct the transaction, or a portion of, as an installment sale, but still keep it a cash transaction from the buyer to protect against future buyer default. Rather than relying on the buyer to make future payments, the buyer transfers payment obligation and the cash to make those payments to a third party assignment company who then invests those proceeds in a secure tax deferred annuity designed to mirror the payment stream established in the installment sale agreement.
The Structured Sale is in full compliance with the tax law. This program is based on Section 453 of the Internal Revenue Code; and the ability for a buyer to transfer his/her payment obligation to a third party is supported by two Revenue Rulings 75-457 & 82-122 .
The Structured Sale provides the flexibility to structure any amount of the sale that qualifies as an Installment Sale under Section 453 IRC. Therefore, it can be used as the foundation of an exit strategy and work extremely well for those individuals looking to cash out from their asset on a tax favored basis and receive a guaranteed income stream for a period of years. You may click here to download a presentation on the program.
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