Save Money by Structuring the Sale of Your Business or Property
When selling your business, real estate, or other appreciated assets, maximizing your profit is naturally your top priority. But even an attractive purchase offer can become problematic when capital gains taxes dramatically erode your net proceeds—sometimes making the deal unworkable or pushing you into a higher-than-usual tax bracket for a single year.
What if you could defer capital gains recognition, spread your tax liability across multiple years, and earn pre-tax interest on your deferred proceeds—all while ensuring guaranteed future payments?
Turns out, you can.
Dan Finn is a nationally recognized expert in Structured Installment Sales whose insights have been published in The CPA Journal, Realty Times and other leading industry publications. With over 35 years of experience, Finn Financial Group has helped business owners and property sellers across the country maximize their after-tax proceeds.
Reduce Your Tax Liability
Taxpayers have been able to defer recognition of income and gains on installment sales since 1918, with formal codification through the Installment Sales Revision Act of 1980 (Internal Revenue Code § 453). Traditionally, however, sellers had to depend on the buyer’s solvency for future payments—a significant risk.
Innovation by major financial institutions has solved this challenge. Through a specially designed assignment process that substitutes obligors, sellers can now enter into installment sale agreements funded with fixed annuities, U.S. Treasuries, or other qualified vehicles. Future payments are guaranteed by life insurance companies with strong ratings from AM Best and other Nationally Recognized Statistical Rating Organizations or backed by other secure instruments.
The IRS, Department of the Treasury, and Tax Courts have established through rulings and case law that properly structured obligor substitution on installment sales is permissible.
How Structured Installment Sales Work
- Contact Finn Financial Group early – ideally before listing your property or beginning sale negotiations
- Buyer and seller negotiate a price for the qualifying business, property, or asset and agree to complete the transaction using the Structured Installment Sale method
- Seller determines how much income to defer and designs a preferred payment schedule
- Obtain quotes and ensure compliance – We provide Structured Installment Sale quotes, plan options, and review all compliance requirements
- Parties execute appropriate documents outlining the terms of the agreement
- Transaction closes – Funding occurs, title transfers, and the transaction is complete
Benefits of Structuring Your Sale
- Reduce tax liability – Spread income across multiple years to avoid higher tax brackets and keep more of your sale proceeds
- Tax-deferred growth – Earn pre-tax interest that compounds until you receive payments
- Customized payment schedules – Design cash flows to fund retirement, major purchases, replace income streams from rental properties or business operations you’re selling, or meet other anticipated needs
- Guaranteed payments – Future payments are backed by highly rated companies or U.S. Treasuries
- No cost to you – Zero out-of-pocket expense and no management fees. We’re compensated by the issuing company only if you choose this option
Three Critical Things to Know
- Timing is Essential – The sale must be structured before the sales agreement is finalized. Once the transaction closes, structuring is no longer possible.
- Not All Transactions Qualify – Review IRS Publication 537 to ensure your transaction meets eligibility requirements. We can help you determine if your sale qualifies.
- Consult Your Tax Advisor – Actual tax benefits depend on your specific situation and future tax bracket assumptions. We work collaboratively with your attorney, CPA, and other advisors to ensure optimal results.
Contact Dan Finn Today
Because Structured Installment Sales involve detailed documentation and coordination among multiple parties, early consultation is critical. Contact Finn Financial Group before finalizing your sale agreement to explore how we can help you maximize your after-tax proceeds.
Phone: 800.531.7466
E-Mail: Dan@FinnFinancialGroup.com
CA Insurance License: 0A96173
The information provided on this website is educational in nature and should not be construed as tax, legal, investment, or accounting advice. Tax laws are complex and subject to change. Please consult with your own independent tax, legal, and financial professionals before making financial decisions.