StructuredSales.org
StructuredSales.org
Alaska sellers show up with a Kenai Peninsula lodge, a Bristol Bay drift permit, a North Slope royalty, or a Mat-Su building the tenant wants to buy. The individual income-tax line on those sales is zero. The federal line is not. A structured installment sale under IRC §453 does not create a state saving the statute never imposed. It can change which federal long-term capital gains rate — 0%, 15%, or 20% — applies to each dollar, whether the 3.8% net investment income tax reaches the gain, and whether the proceeds arrive as one wire or as a schedule. That is a model, not a promised result.
Alaska levies no individual income tax on wages, business income, or capital gains. The Tax Foundation's 2026 comparison also lists no state estate or inheritance tax.
Two other Alaska rules still sit next to a closing. Corporate net income is taxed on a graduated scale from 0% to 9.4%. An individual who sells assets owned outright, or a partnership or S corporation interest that passes the gain to a personal return, does not pay that corporate tax on the gain. A C corporation that sells its assets can owe it before the shareholder computes federal capital gains. Separately, Alaska Statute 43.98.035 bars the state from a sales or use tax on a transfer of real property, so an Alaska deed carries no statewide documentary stamp. Local sales taxes, where cities levy them, are consumption taxes. Borough property tax is a cost of holding. Oil and gas production tax follows production. Selling the royalty is its own gain transaction, with federal depletion recapture under section 1254 where prior deductions require it, and with a section 1014 basis if the interest was inherited.
For 2026, IRS Revenue Procedure 2025-32 sets joint long-term capital gains breakpoints at $98,900 and $613,700 of taxable income: 0% through the first figure, 15% through the second, 20% above it. Single filers: $49,450 and $545,500. The standard deduction is $32,200 joint and $16,100 single, plus $1,650 for each married spouse who is 65 or older or blind. The 3.8% net investment income tax applies to the lesser of net investment income or modified adjusted gross income over $250,000 joint or $200,000 single. Those NIIT thresholds are statutory and are not inflation-indexed.
A lump-sum gain stacks on taxable income you already have. Once ordinary income has used the 0% band, added long-term gain is at least 15%, and dollars that push a joint return past $613,700 are at 20%, with NIIT on most of a large gain. In a structured installment sale the contract pays part of the price later. At closing the buyer pays that portion to an assignment company. The seller does not take receipt of it. The company funds the schedule with an annuity from a rated life insurance carrier. Each payment goes on Form 6252 as return of basis, capital gain, and ordinary interest. The buyer can still write one check at closing, so the seller's credit exposure is the carrier's promise. See how the structure works and the safety discussion. If other income already fills the 20% band every year, spreading may change timing more than the rate.
A lodge is land, buildings, equipment, and goodwill. Land held more than a year is the long-term piece. Boats, vehicles, and other depreciated personal property produce section 1245 recapture, which section 453(i) taxes as ordinary income in the year of sale even when the rest of the price is deferred. Limited-entry permits in some fisheries sell for house-sized prices. Installment reporting can apply when the permit is not inventory or a publicly traded security and at least one payment falls in a later year. Capital versus section 1231 character depends on how the permit was used. Put the vessel and the permit on separate lines in the contract so recapture is identified. Dealers and inventory are outside section 453.
A California or Oregon resident who owns a lodge or royalty in Alaska is taxed by the home state on worldwide income for every year that residency continues. Alaska adds no second individual tax. The California and Oregon guides cover that resident-year problem. Moving north does not re-source property left behind. California Franchise Tax Board Publication 1100 taxes installment gain on California real property after the seller leaves, because of where the land sits. Interest on the note generally follows residence at the time of receipt. Stock sold while the seller was a California resident can remain California-taxable on the gain portion of later installments, because the publication sources that intangible gain to residence at the time of the sale. Real property outside California, collected after the move, is not taxed by California in the publication's example. New York, New Jersey, Minnesota, and Illinois tax nonresidents on in-state real property gain, and New York also reaches some sales of interests in entities that are mostly New York real estate. Domicile is where you live and intend to stay. Holding for a federal basis step-up is a separate question from the installment schedule.
A married couple, both under 65 and long-time Alaska residents, has $95,000 of other adjusted gross income from wages and a pension. This estimate treats that income as outside net investment income. The $32,200 joint standard deduction leaves taxable income of $62,800 before the sale. Equipment recapture of $80,000 is ordinary income in the year of sale on either path and is omitted below. Long-term gain on the land and going-concern value is $1,050,000, recognized at once or as $175,000 a year for six years. Brackets, other income, and the standard deduction are held flat. The table also ignores ordinary interest inside each payment, which is taxed at ordinary rates and can itself be net investment income, and it ignores any extra Social Security a one-year income spike can pull into tax.
| 2026 federal estimate | Lump sum | Each of 6 years | Six years combined |
|---|---|---|---|
| Long-term gain recognized | $1,050,000 | $175,000 | $1,050,000 |
| Gain at 0% (room up to $98,900) | $36,100 | $36,100 | $216,600 |
| Gain at 15% | $514,800 | $138,900 | $833,400 |
| Gain at 20% | $499,100 | $0 | $0 |
| Long-term capital gains tax | $177,040 | $20,835 | $125,010 |
| NIIT at 3.8% | $34,010 | $760 | $4,560 |
| Estimated federal tax on this gain | $211,050 | $21,595 | $129,570 |
On these assumptions the federal tax on the same $1,050,000 of gain is about $81,480 lower when it is spread, before the time value of paying later and before tax on the interest element. Ordinary taxable income of $62,800 leaves only $36,100 of 0% room, and a level schedule reuses that sliver each year. The lump sum puts $499,100 into the 20% band. Lump-sum NIIT is 3.8% of $895,000, because MAGI of $1,145,000 exceeds $250,000 by less than the gain. In an installment year MAGI is $270,000, so NIIT touches $20,000. Alaska adds nothing to either column. Compare paths on the calculator, and add the $80,000 of recapture by hand.
Section 453(e) can pull gain forward if a related buyer resells within two years, which matters when a permit or a lodge moves to a child. Section 453(g) generally denies installment treatment on depreciable property sold to a related person. If year-end installment obligations from non-farm property exceed $5 million, section 453A charges interest on the deferred tax, and a pledge can be treated as a payment. Property used or produced in farming is outside that charge. A lodge is not automatically a farm; test it with the §453A calculator and a CPA. Dealers, inventory, and publicly traded securities are outside the installment method. The income-stream side of a schedule is covered in turning a sale into retirement income.
Alaska has no individual income tax, so an individual seller does not add a state income-tax rate to a long-term capital gain. A C corporation doing business in Alaska can still owe Alaska corporate income tax, at graduated rates up to 9.4%, on income the corporation reports. Federal capital gains tax and the 3.8% net investment income tax still apply to the individual.
The federal long-term capital gains rates for 2026 are 0%, 15%, and 20%, measured against taxable income, and the 3.8% net investment income tax applies once modified adjusted gross income crosses a fixed threshold. Recognizing a large gain in one year fills the 20% band and the NIIT. Spreading recognition under IRC §453 can keep more of the gain in the 15% band, and sometimes reuse a slice of the 0% band, in later years. The result is an estimate, not a promised saving.
No. Alaska residency does not re-source gain on real property located in another state. California's Franchise Tax Board, for example, taxes installment gain on California real property because of where the property sits, including payments received after the seller has left. New York, New Jersey, Oregon, Minnesota, and Illinois also tax nonresidents on gain from in-state real property. Domicile is a facts-and-circumstances test, and a former state may still treat you as a resident.
A permit that is not inventory and is not a marketable security can be eligible for installment reporting if at least one payment arrives in a later tax year, but the character of the gain depends on how the permit was held and used. Depreciation recapture on boats, gear, and other section 1245 property is recognized in the year of sale. Have a tax advisor classify the permit before the purchase agreement is signed.
The interest charge on deferred tax can apply when installment obligations from non-dealer sales exceed $5 million at year-end. Obligations from the sale of property used or produced in the trade or business of farming are outside that charge. A lodge, a commercial building, a permit, or a royalty interest should be tested against the threshold. The charge is a cost of deferral, and it belongs in the model on larger deals.
Last reviewed: October 22, 2026. Estimates use 2026 federal figures from Revenue Procedure 2025-32. Confirm any later federal or Alaska guidance with your advisor before you rely on a figure.
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