Author : Robert W. Wood
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)
Book Synopsis The Tax Advantages of Selling Appreciated Assets Via a Structured Sale by : Robert W. Wood
Download or read book The Tax Advantages of Selling Appreciated Assets Via a Structured Sale written by Robert W. Wood and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Tax generated from the sale of appreciated assets can often be delayed by using an installment sale, which simply involves the seller receiving sale proceeds over a number of years. This article describes the structured sale, which is a blend of an installment sale and a guaranteed payment stream.Typically, the biggest concern for installment sellers is to ensure that stretching out payments does not make ultimately being paid less likely. However, what sellers usually want is the security (and tax efficiency) of a payment stream over many years. Traditional security interests are inadequate. These include a UCC-1 financing, a letter of credit, or a deed of trust on the property sold. Introduced to the market in 2005, a structured sale has the tax benefits of an installment sale, while providing the seller with a guaranteed payment stream without the traditional security problems. In a structured sale, the seller gets a guaranteed payment stream from an annuity purchased from an insurance company. This removes the risk of either nonpayment or acceleration.In a structured sale, the buyer arranges to buy assets from the seller like a traditional installment sale: there may be a down payment in the year of sale and payments in subsequent years. After the sale, the buyer assigns (for payment) his obligation to make future payments to an assignment company. A life insurance company then issues an annuity contract to the assignment company, which makes all periodic payments required by the original installment agreement. All terms of the installment agreement continue to apply, including any pledges of collateral. Once the seller is informed of the assignment, he will look to the assignment company as the primary payment source.A structured sale is eligible for installment sale reporting. Plus, many tax issues should be avoided. There should be no disposition of the installment note upon the assignment. Moreover, there should be no issues concerning the constructive receipt doctrine, the economic benefit doctrine or the cash-equivalency doctrine.