Tax Risks in Promoted Installment Sale Transactions

Tuesday, June 4, 12:30 pm - 1:30 pm Pacific via ZOOM

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Earn 1.0 CA CLE Hour Including Taxation Law Specialization

Meet the Speaker

Andrew L. Gradman, Esq.

Partner

Falcon Rappaport & Berkman LLP

Jessica Monroe, Esq., CPA

Founding Attorney

Tax Law Care

Lou Weller, Esq.

Managing Partner

Weller Partners LLP

About the Program

This presentation focuses on intermediary installment sales (IISs). These are marketed transactions involving a seller who is prepared to sell an asset to a buyer for a stated price. The promoter introduces the seller to an intermediary, who offers to (i) buy the asset for a note in the same amount, and (ii) sell the asset to the buyer for that price in cash (which can then be invested into some other income-producing investment).

The way in which seller benefits from these arrangements differs depending on the transaction. In one popular variation, the “Monetized Installment Sale” (MIS), the intermediary refers the seller to a third-party lender to obtain a loan for close to the same amount of the sale, and all three parties agree to an escrow process whereby seller’s interest income on the note is paid from intermediary to seller’s escrow account, which is ultimately forwarded to another escrow account to pay seller’s loan payment to lender.

IISs are marketed as a tax deferral strategy, and the result approximates a tax-free exchange, like a 1031 exchange but available for non-real property. The panel will discuss the recent proposed regulations on MISs, current enforcement by IRS, and possible alternative approaches to IISs generally.

Section Sponsor

This program is presented by the Taxation Law section, chaired by Michele Weiss. Find out more about the section at www.bhba.org.

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