Intermediated Installment Sale Strategy Analysis
This calculator compares intermediated installment sale structures with direct sale strategies to help you understand the true economic impact of deferring capital gains tax through an intermediary trust.
The analysis evaluates total family wealth after the installment term, accounting for investment returns, tax obligations, Section 453A interest charges, and trustee fees. Both strategies assume identical investment approaches to ensure an apples-to-apples comparison.
Strategy Parameters
Transaction Details
Tax Rates
Financial Assumptions
Model Assumptions
- Both strategies use identical investment approaches: Direct sale proceeds and installment trust assets are invested the same way
- Investment breakdown: 2% dividend yield, 2% realized gains annually, remainder deferred until final liquidation
- Seller reinvests all interest payments: Installment sale assumes seller reinvests after-tax interest income at the same rate
- Annual tax burden: Both strategies pay tax on dividends (2%) and realized gains (2%) each year
- Trust administration: Trustee fees deducted from trust assets annually
- Section 453A interest: Calculated on deferred gain above exemption threshold (if applicable)
Strategy Comparison
Total family wealth after the specified term under each strategy
Direct Sale
Installment Sale (With 453A Interest)
Installment Sale (With $10M Exemption)
Key Insights
Annual Schedule
Detailed cash flow analysis for installment sale trust
| Year | Beginning Balance | Investment Income | Interest Paid | Trustee Fees | Taxable Income | Corp Tax | Cash Flow | Ending Balance |
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Disclaimer: This calculator provides estimates for educational purposes only and should not be considered legal or tax advice. Every business situation is unique, and the actual tax implications of implementing an intermediated installment sale strategy depend on numerous factors including state laws, business structure, trust situs, and individual circumstances. The IRS has expressed concerns about certain intermediated installment sale structures and may challenge the tax treatment claimed in such transactions. Please consult with a qualified tax professional or attorney before making any decisions regarding installment sale planning.