MONETIZED INSTALLMENT SALE CONCEPT

A Monetized Installment Sale structure allows sellers of highly-appreciated assets (stocks, real estate, businesses) to enjoy tax-deferral with liquidity and access to capital for on-going business or personal needs.

SUMMARY OF 

MONETIZED INSTALLMENT SALE CONTENT:

A Monetized Installment Sale (MIS) structure allows sellers of highly appreciated assets (stocks, real estate, businesses) to enjoy tax-deferral along with providing liquidity and access to capital for on-going business or personal needs. In this transaction, an intermediary acquires the appreciated asset via an installment sale under IRC 453 and then resells the asset to the end buyer. Concurrently, a third-party lender issues a loan to the seller of the asset equal to approximately 95% of the value of the asset.

 

This type of transaction has been implemented by dozens of large companies and is its legitimacy is based on IRS notice 20123401F and as long as it complies with the Economic Substance Doctrine (done for a true business purpose) will allow the seller of a highly-appreciated asset to defer the sales tax on the sale of the asset for up to 30 years while providing liquidity and access to capital in a very efficient manner.

This is done in three distinct steps:

  • The Installment Transaction

  • The Loan Transaction

  • The Third-Party Processor Transaction

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MONETIZED INSTALLMENT SALE

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