You’re Going to Disclose Everything to Me! Monetized Installment Sales under the IRS’s Microscope

The IRS formally proposed rules targeting a type of monetized installment sale as a potential tax avoidance deal that would require participants and material advisers to provide additional reporting under the threat of penalty. The IRS says that the sole economic reason for engaging in this type of transaction, where a cash payment for the sale of property is monetized to be paid in installments, is to pay direct and indirect fees to the "intermediary and the purported lender in an amount that is substantially less than the federal tax savings purportedly achieved from using Section 453 [installment rules] to defer the realized gain on the sale." Buyer beware!

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