Structured Installment Sales

Solution

As a seller of real property, business assets, a professional practice, artwork, or certain other types of capital assets, you may prefer for financial and tax reasons to defer the receipt and taxation of your sale proceeds. Internal Revenue Code Section 453 allows you to time the receipt of sale proceeds and their taxation if you operate within an established framework.

Dominion Assignment Company provides the framework upon which you and your trusted tax and financial advisors can build a long-term financial plan to carry out your sale in a way which will reduce your annual tax burden and provide greater control over the timing of the receipt of your income.

A structured installment sale requires you and the buyer to agree in advance to an installment sale obligating the buyer to make periodic payments to you in accordance with a predetermined payment schedule. The buyer assigns the payment obligation to DAC along with assets to fund the payments. Each payment you receive comprises three parts for tax purposes: pro-rata capital gain, pro-rata tax-free return of basis and taxable interest.

Key Benefits

A customizable reliable income stream can help you manage your cash flow
Sale proceeds are invested on a pre-tax, tax-deferred basis.
You can choose among flexible investment options to fund payments.
Payments are made to you under an agreed periodic payment plan, with taxes due in the year you receive payments, which may reduce the marginal tax rate applicable to the taxable portion of the sale proceeds.
Although the buyer funds the purchase price in cash at closing, the financial benefit you receive from a structured installment sale may allow you to offer a discount to potential buyers, making a sale more likely.

Investment Options

DAC offers the following investment options for structured installment sales.

Same changes as attorney dee deferral.

Customized Investment Portfolio

You can defer installment sale proceeds of $2 million or more to be invested directly in a customized portfolio of investments. The payments generated wholly depend on the investment portfolio performance. You can choose the investment manager and can set portfolio-level investment objectives and risk parameters.

PPVA

You can defer installment sale proceeds of $1 million or more to be invested in a private placement variable annuity (PPVA) contract which wraps an underlying customized portfolio of investments. A PPVA contract can be issued by a U.S. or non-U.S. life insurance company. The payments generated wholly depend on the performance of the investment portfolio underlying the contract. You can choose the investment manager and can set portfolio-level investment objectives and risk parameters. A PPVA contract may marginally outperform a directly invested portfolio if the chosen investment strategy regularly generates significant (4% or more of the total portfolio annually) amounts of U.S. stock dividend income.

Fixed Indexed Annuity

You can defer installment sale proceeds of $500,000 or more to be invested in a fixed indexed annuity contract issued by a U.S. life insurance company. The payments generated combine features of fixed (guaranteed) and variable (based on a stock market index) annuity contracts. Fixed indexed annuity contracts often provide complete downside protection in the form of a 100% return of principal guarantee.

Not a Monetized Installment Sale or Deferred Sales Trust

Dominion does not facilitate or participate in “monetized installment sales” or “deferred sales trust” transactions. Borrowing connected to the payment rights from an installment sale is not permitted, except on a limited basis in connection with the sale of certain agricultural assets.

Solution

Investment Options

Other solutions offered by the DAC provides assignment company;