Resources / Monetized installment sales and the IRS

Monetized Installment Sales and the IRS: Where Things Actually Stand

By Sean Whitehead, Structured Settlement Consultant & Content Contributor · August 10, 2026 · 9 min read

If you've been offered an arrangement that gives you roughly 93 to 95 cents on the dollar in cash at closing while deferring capital gains tax for thirty years, you've been offered a monetized installment sale — and you should know what the government has said and done about them before you sign anything.

This page is deliberately factual. We implement structured installment sales, which are a different arrangement, and we have an obvious interest in the distinction. So rather than characterize, we've linked the primary documents: the proposed regulations, the Federal Register notices, and the litigation. Read them yourself, or hand them to your CPA.

What the arrangement is

The structure, as the IRS describes it: a seller of appreciated property finds a buyer willing to pay cash. Instead of selling directly, the seller transfers the property to an intermediary — often the promoter — in exchange for a long-term installment note, typically thirty years, interest-only, with a balloon payment of principal at maturity. The intermediary immediately resells the property to the buyer for cash. Separately, a lender makes the seller a purported non-recourse, unsecured loan of most of the sale proceeds.

Net effect as marketed: the seller has nearly all the money immediately, reports the transaction as an installment sale, and defers the gain for three decades. Fees typically run around 5% to 6.5% of the sale price across the intermediary, lender, and escrow agent.

What the IRS has actually said and done

Four things, all publicly documented:

Chief Counsel guidance (2021). IRS Chief Counsel advice concluded the theory underlying these arrangements is flawed — that an unsecured non-recourse loan with no collateral is not genuine indebtedness, and that the arrangement produces constructive receipt. Coverage of that guidance is here.

Dirty Dozen listings. The IRS named monetized installment sales in its annual list of abusive arrangements in 2021, 2022, and 2023 — the 2023 entry appearing in news release IR-2023-65 alongside abusive charitable remainder annuity trusts.

Proposed listed-transaction regulations (2023). On August 4, 2023, Treasury and the IRS published proposed regulations (REG-109348-22) that would identify monetized installment sales and substantially similar transactions as listed transactions, requiring participants and material advisors to disclose them and imposing penalties for failure to do so. A public hearing was later cancelled. The Journal of Accountancy's summary covers the mechanics.

Litigation (2025). In April 2025 the Department of Justice filed a complaint in the District of Idaho against a promoter and his company, seeking a permanent injunction against promoting these transactions; the complaint alleges hundreds of transactions and total reported sales in the hundreds of millions since 2015. A summary of the filing is here. These are allegations in a pending civil action, not findings. Separately, a promoter's own suit challenging the proposed regulations was dismissed in September 2025 on the ground that proposed rules aren't ripe for review.

The status that matters: still proposed

As of this page's last review, the regulations remained proposed rather than final. That distinction is genuine, and promoters use it: nothing has been formally designated yet.

It's also thin ground to stand on. The proposed rules contemplate that material advisor disclosure obligations would reach back six years before finalization. Treat the current status as a timing question rather than a verdict, and note that your CPA — who would be a material advisor — bears exposure alongside you.

How this differs from a standard installment sale

The installment method itself is ordinary, statutory tax law. IRC §453 and Publication 537 describe it; millions of sellers use it every year by simply being paid over time and reporting on Form 6252. Nothing about installment reporting is controversial.

The controversy is the loan. In a monetized arrangement, the seller receives nearly all the cash immediately through borrowing tied to the transaction — which is what raises constructive receipt and genuine-indebtedness questions, and what the proposed regulations target.

A structured installment sale involves no loan against the obligation. Part of the price is directed at closing to an assignment company that funds a payment schedule through an annuity from a rated life insurance carrier; the seller is paid on the schedule and reports gain as payments arrive. There's no monetization, no borrowing against the obligation, and no cash-now-defer-later claim — which is also, honestly, why it appeals to a different seller. If your requirement is all the money now, the structured route won't satisfy you, and we'd rather say that than pretend otherwise.

If you've already done one

Talk to a tax controversy attorney, not a promoter and not us. If the regulations are finalized, disclosure obligations may reach transactions completed years earlier, and the analysis of your specific facts is legal work. This is one of the few situations where the right next call is a lawyer rather than an advisor.

FAQs

Are monetized installment sales illegal?

They have not been designated listed transactions — the regulations that would do so remain proposed — and no statute prohibits them by name. But the IRS has stated in Chief Counsel guidance that the underlying theory is flawed, named them on its Dirty Dozen list three years running, and the DOJ has sued a promoter seeking an injunction. That is a materially different risk posture from an ordinary installment sale.

What is a listed transaction?

A transaction the IRS has formally identified as abusive. Participants and material advisors must disclose them, and penalties for failure to disclose are substantial. The proposed regulations would place monetized installment sales in this category.

Is a structured installment sale the same thing?

No. A structured installment sale involves no loan against the installment obligation — the seller is paid on a schedule funded by an annuity from a rated carrier. The borrowing that characterizes a monetized arrangement is precisely what the IRS is targeting.

Are the regulations final yet?

They were still proposed as of this page's last review. Check the Federal Register for current status; the proposed rules contemplate disclosure obligations reaching back six years before any finalization.

Sources

Last reviewed: August 10, 2026.

Nothing above is tax or legal advice. Everything asserted here about the government's position is linked to a primary or professional source so you can verify it independently — which is the appropriate standard for a page written by someone who sells an alternative.

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