Our Structured Installment Sale solution can help your clients who are selling a property or business defer and potentially reduce taxes allowing them to keep more of their proceeds.1 Our solution also enables them to convert these proceeds into a dependable stream of income that is immune to market volatility.2 To help your conversations with clients, here are some Frequently Asked Questions.
IRC Code 453
A type of non-qualified assignment designed for property sales to transfer periodic payment obligations to an assignment company where the seller/annuitant will receive at least one payment after the tax year in which the sale occurs. This is for property sales that are eligible for the Installment Method under Internal Revenue Code Section 453.
- Disposition of inventory
- Dealer disposition of real and personal property with certain exceptions as provided in IRC Section 453
- Disposition of stock and securities traded on an established market
- Portion of the gain attributable to depreciation recapture taken on real or personal property
- Disposition of depreciable property between related persons with certain exceptions as provided in IRC Section 453
We recommend that you and your clients always consult your independent tax advisors to review eligibility under IRC 453.
- Buyer and Seller execute Purchase and Sale Agreement with Addendum agreeing to periodic payments
- Buyer assigns periodic payment obligation and transfers a lump sum to MetLife Assignment Company, Inc. (MACI)
- MACI uses lump to purchase an annuity contract matching its acquired periodic payment obligation
- Metropolitan Tower Life Insurance Company (Met Tower Life) issues annuity contract to MACI
- Met Tower Life distributes periodic payments to Seller accordingly
- Defer and potentially lower your client’s tax rate by breaking up the gain they receive from one year to several years. May also reduce associated net investment income taxes1
- Confidence that the installment sale income will be paid by a financially strong, highly rated third party like Metropolitan Tower Life Insurance Company2,3
In general, if your seller’s installment sale obligations (i.e. payments that you are owed) are greater than $5M, the IRS imposes an interest charge. Please refer to IRC Section 453A(a)(1). Exceptions to this rule include:
- Personal use property and
- Trade or business, related to farming
We recommend that you and your client always consult your independent tax advisors to review IRC 453.
For more information, please contact:
Paul Marshall - Sales Director
pmarshall1@metlife.com
Philippe Petit - Sales Director
ppetit@metlife.com
1. Neither MetLife nor its affiliates offer tax or legal advice. Any discussion of taxes in this material is intended to be general in nature and thus does not purport to be complete or cover every situation. In addition, it is based on our understanding of the tax laws as they currently apply. Tax laws are subject to change and to different interpretation. You should consult your own tax advisor to determine how the tax law applies to your situation.
2. All guarantees are subject to the financial strength and claims-paying ability of Metropolitan Tower Life Insurance Company.
3. For current ratings information and a more complete analysis of the financial strength of Metropolitan Tower Life Insurance Company, please go to www.metlife.com and click on “About Us” and then click on “Company Ratings”.