If property is sold in a transaction in which the seller is to receive one or more payments at a future date, the transaction will generally be treated as an installment sale for federal income tax purposes. This can allow the seller to recognize gain from the sale as payments are received rather than entirely upfront in the year of the sale.

In recent years, various promotors have marketed so-called “monetized installment sales,” which would purportedly allow a seller to benefit from installment sale treatment while still effectively receiving substantially all of the cash proceeds in the year of the sale. Unsurprisingly, the IRS recently issued a Chief Counsel Advice Memorandum (CCA 202118016) explaining why such transactions should not be respected for income tax purposes.

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