Small Business Taxes & Management

Special Report

IRS Issues Proposed Regulations on Monetized Installment Sale Transactions


Small Business Taxes & ManagementTM--Copyright 2023, A/N Group, Inc.


The Department of the Treasury and the IRS have issued proposed regulations identifying certain monetized installment sale transactions and substantially similar transactions as listed transactions--abusive tax transactions that must be reported to the IRS. The intent of the transaction is for the seller to receive installment sale treatment and not report gain on the transaction until receipt of a balloon payment some time in the future. However, through a loan from a third party the seller does immediately receive the cash amount of the sales price less intermediary fees. The IRS claims the intermediary has not legitimately purchased the property because it does not enjoy the benefits nor bear the burdens of ownership and the transaction lacks economic substance.

Material advisors and certain participants in these listed transactions are required to file disclosures with the IRS and are subject to penalties for failure to disclose these transactions. The IRS listed monetized installment sales this year as part of the agency's Dirty Dozen list of common tax scams and schemes.

Monetized installment sale transactions generally include the following elements:

For more information, see proposed regulations REG-109348-22.


Copyright 2023 by A/N Group, Inc. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The information is not necessarily a complete summary of all materials on the subject. Copyright is not claimed on material from U.S. Government sources.--ISSN 1089-1536

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--Last Update 08/04/23