A Structured Sale can be a very effective tax planning tool for the sale of a business.
In a Structured Sale, a pre-determined third party receives the sale proceeds and the seller may defer the payment of capital gain taxes (Section 453 of the Internal Revenue Code) by preventing receipt of the sale proceeds until a future date, when the periodic principal payments are received by the seller.
The use of Structured Sales are a long term financial security and planning option used by many owners to manage their taxes after a sale. By using a structured sale annuity, a seller can receive payments monthly all the way to a balloon lump sum set for a future date. The Structured Sale can be designed to meet the sellers future income needs on both the income-side and the tax-side.
As with any real estate or business transaction, we always recommend you talk to your own attorney, financial advisor, and your CPA about the pros and cons to a structured sale in your unique situation.
David C. Johnson