Structured installment sale basics
What is a structured installment sale?
A structured installment sale allows an eligible seller to receive part of a property or business sale at closing and the balance through guaranteed periodic payments scheduled for future tax years.
The basic idea
Instead of receiving the entire purchase price in one year, the seller and buyer agree before closing to a schedule of future payments. The buyer assigns the covered payment obligation to an assignment company, which purchases an annuity designed to make those payments.
Why sellers consider it
A seller may want present liquidity and dependable future income rather than one large payment. The schedule can be coordinated with retirement, succession, family needs and other financial planning. Eligible gain is generally recognized as installment payments are received, subject to the seller’s circumstances and professional tax advice.
Timing is essential
The arrangement must be part of the transaction before the seller has an unconditional right to receive the proceeds. It cannot ordinarily be added after closing or after funds are received. Bring the seller’s CPA and attorney into the discussion early.
Not every sale qualifies
Eligibility depends on the property, buyer, transaction structure, documentation and tax rules. Depreciation recapture, inventory, debt, related-party issues and other facts may require separate treatment. Muir Structured Sales coordinates illustrations and mechanics but does not replace the seller’s tax or legal advisors.
Timing matters