Collateralized
Installment Sales —
Implementing Section 453 of the Internal Revenue Code
As a dealer in appreciated assets, S.Crow Collateral Corp. is pleased to be a leader in implementing a process for which Congress provided in Section 453—the installment-reporting section—of the Internal Revenue Code.
In Section 453, Congress explicitly provided for the role of a dealer in regard to installment purchases and sales. In so doing, Congress said that when a dealer sells the asset the dealer may not report the dealer’s gain on an installment basis, no doubt because for the dealer it is a sale in the ordinary course of business. However, when a dealer buys the asset on an installment contract, the transaction comes within the general rule for installment reporting for the seller to that dealer.
Further, Congress clearly knew that dealers try to buy and re-sell as soon as possible (or even to sell before they buy!), so Congress did not establish any holding-period requirement for the dealer. There’s a two-year holding requirement for related parties to the installment seller, but none for a dealer—or there wouldn’t be any dealers.
S.Crow Collateral Corp.’s installment purchases as a dealer, as described in these pages, are not a way to try to get around the tax law in any respect. Instead, our installment purchases as a dealer are the implementation of what Congress intended and for which Congress included substantive provision in the statute.
Substance, congressional intent, and the language of the statute come together in our role as a collateralized installment sale dealer.
Therefore, if you wish to:
- sell your appreciated asset,
- defer the tax on the gain on the sale for as many as 30 years,
- receive a market rate of return based on the gross, pre-tax re-sale proceeds,
- enjoy the security of knowing that our contract with you is backed by money which is invested in an account which is legally secured in your favor with a financial services firm which you approve, and
- eventually pay the tax in depreciated dollars,
a collateralized installment sale may be right for you. Explore these pages, obtain a free subscription to our weekly publication, The Latest Installment, and let us help you to achieve your objectives.