Structured sale
A structured sale is a U.S. tax strategy that blends the installment-sale rules with a third‑party assignment company. The buyer pays the assignment company, which commits to the scheduled payments to the seller and funds those payments with assets such as an annuity or other fixed‑income investments. This arrangement is marketed as a way for sellers of appreciated property (like closely held businesses or investment real estate) to spread out capital gains and receive regular payments backed by the assignment company.
Structured sales sit among several methods to manage capital gains, alongside ordinary installment sales, 1031 exchanges, and other deferral techniques. Under the installment method (26 U.S.C. § 453), a seller who receives payments after the sale can report gain over time as payments come in, subject to statutory rules and potential interest charges for large installment obligations. The basic rules apply to many sales of business interests and investment real estate but not to inventory, publicly traded securities, or certain other property.
In a structured sale, the assignment company is placed between the buyer and seller. The buyer (or an related party) pays the assignment company the portion of the price to be deferred. The assignment company then takes on the obligation to make the seller’s payments and funds that obligation with a funding asset, typically an annuity from a regulated life insurer or a portfolio of U.S. Treasury securities held in trust. Often the seller has no ownership or control over these funding assets and is an unsecured general creditor of the assignment company.
This approach is used mainly to help sellers of appreciated assets coordinate cash flow and income timing, potentially smoothing taxable income over several years while shifting investment risk to the assignment company and its funding assets. It is described alongside other options like simple seller-financed installment sales, 1031 exchanges, and charitable or trust-based strategies.
Because structured sales rely on the installment method, their tax treatment follows the general rules of §453. Each payment usually has three components and is subject to the same statutory limits as other installment sales. Some property types are ineligible, certain recapture income may be taxed immediately, and there can be interest charges on large obligations under §453A. In many non‑qualified assignment structures, the seller cannot accelerate or control the payment stream. Guidance and case law generally hold that if these limitations are respected and the seller’s rights are only an unsecured contractual claim, the seller does not have to recognize the entire funding amount when the assignment company receives it.
Structured sales are sometimes offered as an alternative when a 1031 exchange isn’t available or desirable—for example, when the seller wants cash flow now or when matching like-kind property within the time limits is difficult.
They are distinct from monetized installment sale arrangements, where a seller both defers gain and borrows against the installment obligation, which has drawn IRS scrutiny. Some commentators compare structured sales with other deferral concepts like deferred sales trusts, noting differences in complexity, fees, and the level of IRS guidance.
Like any seller‑financed arrangement, structured sales come with potential drawbacks and risks, in addition to the usual concerns about seller financing.
This page was last edited on 3 February 2026, at 05:31 (CET).