Using Deferment to Significantly Reduce the Tax Burden of Asset Sales


Selling your real estate, business or other capital asset can come with some hidden tax
surprises. Owners are often shocked to learn that their tax obligation may be even higher
than the current 20% federal capital gains tax rate, state rate and the additional 3.8% Net
Investment Income Tax brought on by the Affordable Care Act.

Not understanding the tax codes and how to properly apply them, owners often times
pay unnecessary taxes when they sell their assets and see a significantly greater portion of
their profits eaten away.


By coupling a monetization loan with an installment sale, Sellers can lawfully defer the
capital gains taxes for decades and receive at escrow closing a tax-free lump sum of
money that is nearly equivalent to the amount of the sale proceeds.

This planning approach is applicable to the sale of most any highly appreciated asset,

  • Real estate – Commercial, Investment Property, Land – Even Principal Residences
  • C-Corporations and S-Corporations – including professional practices (Medical, Dental,
    Chiropractor etc.)
  • Partnerships, Partner Buyouts, & LLC’s
  • Privately held stock
  • Collectables – Art collections, car collections and antique collections are all
  • Contract and mineral rights
  • And many more…


  • $1.1m Dental practice increased proceeds by 46%
  • $10m apartment complex sales increased proceeds by 34%
  • $2.9m personal residence increased proceeds by 20%
  • $26.9m farm property increased proceeds by 45%

Key Benefits

  • Seller receives a non-taxable lump sum nearly equivalent to the sale proceeds that can
    be invested and controlled by the Seller.
  • Capital gains taxes are deferred for decades, enabling the taxes to be paid with
    inflation-adjusted dollars
  • Provides an exit strategy and does not require the purchase of “like-kind” replacement
    property like in a 1031 Exchange
  • Can rescue a failed 1031 Exchange
  • No requirement to donate the asset to a charity
  • Allows for capital asset sales to related parties


  • Most capital assets with a selling price of $500,000 or more with no maximum
  • Sellers of appreciated assets who desire a true exit strategy
  • Sellers who do not want to give their asset to charity or are limited by annuity payments
  • Any seller facing a substantial capital gains tax obligation at closing, cancellation of
    debt, depreciation recapture, expected the failure of a 1031 exchange, pre-payment of
    an installment debt

IRS Codified

  • Installment Reporting has been in law since 1913
  • The IRS codified into law in 1980 the ability to monetize installment sale contracts
    without losing tax deferral
  • Office of the Chief Counsel of the IRS in 2012 issued a memorandum that supports the
    the foundation of this planning approach