Sell Your Business or
Property for an Assured
Stream of Income
Selling a Business or Personal Property?
Many Individuals selling a business, professional practice or personal property would like to liquidate their investment without having to recognize the entire profit as taxable in year of the sale. Instead, you (the Seller) would like to sell your business in exchange for a stream of income.
By making the sale and having part of the proceeds payable over several years, you can use the payment proceeds as a source of income and maybe be able to recognize the taxable gain as the installment payments are received or deemed received.
What is an Installment Sale?
For a sale to be considered an installment sale, it must be a sale at least one payment after the tax year of the sale (
1,2). Each installment payment you receive will consist of the following three components:
- Nontaxable recovery of the investment
- Taxable gain
- Interest
What Should you consider When Using an Installment Sales?
Since an installment sale permits you to receive the payment from the buyer in future tax years, you could potentially be at risk regarding the credit worthiness of a buyer. In order to minimize this risk of the installment sale, the sale can be structured so that the periodic payments will be funded with an annuity from a large, highly rated life insurer like Allstate Life Insurance Company (Allstate Life). Allstate Life will help provide assurance that you will receive future periodic payments.3
How Can The Sale be Structured?
Assuming the asset being sold qualifying for reporting on the installment method, here's how the process would typically work:
- You enter into a installment sale agreement under which a buyer promises to make periodic payments for stated number of years.4
- The buyer assigns his or her periodic payment obligations to an assigned company.
- The assignment company funds the payment obligation by purchasing an annuity from Allstate Life.
- Allstate Life begins making the payments to you as agreed to under the terms of the sale and issues an agreement to pay on the performance of the assignment company.
What Are The Benefits of an Installment Sale?
- Defer the recognition of the taxable gain.
- Guarantee a rate of return.
What are the Benefits of Structuring that Sale?
- Alleviate concern about the buyers ability to make payments.
- Ease concern about investment risk.
- Long-term financial security.
- Financially Solid
- Allstate Life Insurance Company is one of the largest life insurance companies in the U.S. Allstate Life Offers customers high financial strength ratings and is committed to providing you the quality service you expect and deserve. Allstate Life has consistently earned high ratings from the nations leading ratings agencies.
- Allstate Life is a recognized leader in the structured settlement industry, with over $8 billion in structured settlement annuities.
- Real or personal property sold by a dealer or a person who regularly sells property on the installment plan and property included in inventory do not qualify for the installment sale rules. Marketable securities are not eligible for installment sale treatment,. Please consult a tax advisor before entering into an installment sale agreement.
- Special rules apply to non– dealers. Please consult a tax advisor to determine whether those rules could impact your agreement.
- Based on the claims– paying ability of Allstate Life Insurance Company.
- The seller is responsible for reporting any applicable installment sale income to the IRS and should consult with a tax advisor for details.