The process starts when a business owner or real estate investor sells their business or property to a trust owned by a third-party company. The trust then sells the business stock or property. Next, the trust “pays” you.  The payment isn’t in cash, but with a payment contract called an “installment contract.” The contract promises to make payments to you over an agreed period of time. There are zero taxes to the trust on the sale since the trust “purchased” the property from you for what it sold it for. The payment is made with an installment contract which makes payments to you over an agreed period of time.

The options on when and how payments can be made are flexible. You may have other income and don’t need the payments right away. The tax code doesn’t require payment of the capital gains until you start receiving installment payments. The capital gains tax is paid to the IRS with an “installment plan” since only that portion of capital gains is due in proportion to the number of years established in the term of the installment agreement.

You can request an analysis of the sale of your business or property using the Deferred Sales Trust™ by clicking on the orange button at the top of this page. A DST trained and approved trust case manager will then review the illustration with you which you can then share with your CPA or tax attorney. Depending on the facts and circumstances associated with your transaction, there may be a more appropriate tax strategy to help you achieve your financial objectives. Please continue to review this website for more tax advantaged strategies that you might find useful.