Intermediated Installment Sale Strategy Analysis

Intermediated Installment Sale Strategy Analysis

Comprehensive comparison of intermediated installment sales versus direct sale strategies for tax-efficient wealth transfer.

Strategy Parameters

Transaction Details

Fair market value of asset
Original purchase price
Investment horizon

Tax Rates

Combined federal and state
Marginal tax rate
Trust corporate tax

Financial Assumptions

Annual pre-tax return
Interest on installment note
Annual fee as % of assets

453A Interest Costs

For 453A calculation
Avoids Section 453A interest on first $10M

Strategy Comparison

Total family wealth after the specified term under each strategy

Direct Sale

Pay tax now and invest

Initial Capital Gains Tax —
After-Tax Proceeds —
Effective After-Tax Return —
Final Portfolio Value —
Total Family Wealth —

Installment Sale

WITH Section 453A Interest

Trust After-Tax Value —
Principal After Tax —
Interest After Tax —
453A Interest Paid —
Total Family Wealth —
Difference vs Direct —

Installment Sale

WITHOUT Section 453A Interest

Trust After-Tax Value —
Principal After Tax —
Interest After Tax —
453A Interest Paid $0
Total Family Wealth —
Difference vs Direct —

Key Insights

  • Enter your parameters above and click "Calculate Analysis" to see personalized insights

Model Assumptions

  • Both strategies use identical investment approaches for true apples-to-apples comparison
  • Annual dividend yield of 2% (taxed as ordinary income for individuals, corporate rate for trust)
  • 2% of capital gains realized annually for rebalancing (taxed at capital gains rate for individuals, corporate rate for trust)
  • Remaining ~96% of capital gains compound tax-deferred in both strategies
  • In the installment sale, seller reinvests all after-tax interest payments using the same investment approach
  • Trust management fee of 0.5% annually on trust assets
  • No transaction costs or additional fees are modeled
  • Tax rates remain constant throughout the investment period

Annual Schedule

Detailed cash flow analysis for installment sale trust

Year Beginning Balance Investment Income Interest Paid Trust Fees Taxable Income Corp Tax Cash Flow Ending Balance
Click "Calculate Analysis" to generate the annual schedule