Promoter structures library
Monetized Installment Sale
Sold as: "M453", "monetized installment sale", "sell now defer 30 years", "get 93.5 percent of your money at closing and pay no tax"
If you walked away from closing with 93.5 percent of the money, you were paid. Calling the payment a loan does not change that, and the loan terminates on the same day the note does.
Classification A. There is no compliant way to do this as it is marketed.
The pitch
Sell the asset, walk away from closing with 93.5 percent of the money as a nonrecourse loan, and defer the gain for 30 years under Sec. 453.
How the structure works
Seller sells to an intermediary on a 30-year interest-only installment note. The intermediary immediately resells to the real buyer for cash, with title passing directly from seller to buyer. A lender then makes the seller a purported nonrecourse loan equal to the sale proceeds, funded by the intermediary's cash. The seller has the money and claims Sec. 453 deferral.
Where it breaks
The instruments are offsetting and terminate together. There is no genuine indebtedness. The intermediary never takes title and is not a real acquirer for Sec. 453 purposes. The loan is an economic benefit and a deemed payment. Sec. 453A interest charges are ignored. The IRS also invokes constructive receipt and the economic benefit doctrine per Sproull v. Commissioner.
What it costs you if it is wrong
The deferral fails and the gain is taxable in the year of the sale, with interest running from then. The proposed listed-transaction regulation was never finalized, so there is no Form 8886 requirement and no Sec. 6707A here, and that changes nothing about the substantive attack.
Red flags specific to this structure
- You have the money and the paperwork calls it a loan
- The note is with an intermediary rather than the actual buyer
- The loan and the note run the same term and end together
- Title passes straight from you to the buyer
- Nobody computed Sec. 453A interest
Questions to ask the person selling this
Take these into the next meeting. Someone selling the legitimate version answers them without difficulty.
- 1Will I have the money at closing? If so, why is that not a payment?
- 2Who holds my note: the actual buyer, or an intermediary?
- 3Do the note and the loan run the same term and terminate together?
- 4Does the intermediary ever take title?
- 5Who computes Sec. 453A interest?
- 6What has the IRS said about this structure?
Which of the Seven Markers this trips
The client keeps control of what they supposedly gave away
The economics do not work without the tax benefit
The legitimate version
A plain installment sale under Sec. 453: the seller finances the buyer directly, takes a real note secured by the asset, bears real credit risk, reports on Form 6252, and accrues Sec. 453A interest if applicable. Or a structured installment sale with a licensed annuity issuer.
What distinguishes it
- The seller does NOT have the money
- The note is with the actual buyer
- Real credit risk exists
What the courts have done
How this has actually gone for the people who bought one.
Enforcement
DOJ complaint filed April 2025 in the District of Idaho against a former tax and real estate attorney and his company seeking to enjoin MIS promotion. Also a Dirty Dozen item.
Reporting status
PROPOSED ONLY. Prop. Reg. 1.6011-13 (REG-109348-22, published Aug. 4, 2023) would designate MIS as listed transactions. NOT FINALIZED as of August 2026 and absent from the 2025-2026 Priority Guidance Plan. Disclosure is not mandatory. The SUBSTANTIVE ATTACK IS ENTIRELY UNAFFECTED.
Holding one of these, or being pitched one?
The diagnostic work is worth doing before the return gets filed rather than after. That is a conversation, not an engagement.
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