Structured Installment Sale

A type of non-qualified assignment designed for property and business sales to transfer periodic payment obligations to an assignment company where the Seller will receive at least one payment after the tax yearin which the sale occurs. This solution is designed for property and business sales that are eligible for the Installment Method under Internal Revenue Code Section 453.¹

Process:

1. Buyer and Seller execute Purchase and Sale Agreement with Addendum agreeing to periodic payments
2. Buyer assigns periodic payment obligation and pays a single sum to MetLife Assignment Company, Inc. (MACI)4
3. MACI uses the single sum to purchase an annuity contract/funding agreement matching the acquired periodic payment obligation
4. Metropolitan Tower Life Insurance Company (Met Tower Life) issues annuity contract/funding agreement to MACI
5. Met Tower Life distributes periodic payments to Seller accordingly

• Disposition of inventory
• Dealer disposition of real and personal property with certain exceptions as provided in IRC Section 453¹
• 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 453¹

Always consult your independent tax advisors to review eligibility under IRC 453¹. 

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)¹. Exceptions to this rule include:

• Personal use property and
• Trade or business, related to farming

Always consult your independent tax advisors to review eligibility under IRC 453¹.

Periodic payments must be made for the benefit of the individual or the entity that is named as a party to the sale. Outside of issuing payments directly to the named individual or entity, acceptable payees may also include trusts, businesses, or corporations but home office approval is required.

With the traditional SIS, periodic payments must start immediately (within one year of purchase date).

With the SIS-FA, there is flexibility in how the periodic payments can be issued. Payments may be issued in the form of a single lump sum or a series of payments. Annual increases are also offered.^2,3

No, periodic payments cannot be life-contingent. Any remaining unpaid guaranteed payment(s) will continue to the beneficiary (either named beneficiary or estate). If elected at the time of assignment, payments may be commuted upon death for the traditional SIS or follow the accelerated benefit event for the SIS-FA.^2,3

No.

In general, each payment on an installment sale consists of the following three parts:

• Interest income
• Return of your adjusted basis in the property
• Gain on the sale

1099-B Proceeds from Brokers and Barter Exchange Transactions. Met Tower Life completes sections 1a-1d, 4 and 6. Proceeds are reported on a gross proceeds basis on annual installment payments.

Seller/Payee uses Form 6252 to report income from an installment sale on the installment method.