Internal Revenue Code §453 has been law since 1926. The Structured Installment Sale (SIS) is built on it. The IRS published Revenue Procedure 2005-26 specifically blessing the carrier-assignment version. A-rated insurance carriers publish their own white papers explaining it to lawyers. None of this is secret. It is just rarely discussed — and there are real reasons why.
Section 453 of the Internal Revenue Code is the installment method. The plain-English version: if you sell something for a gain and at least one payment is received in a tax year after the year of sale, you generally recognize the gain as you receive each payment — not all at once in the year of closing.
"Except as otherwise provided in this section, income from an installment sale shall be taken into account for purposes of this title under the installment method."
That is the whole engine. The seller does not have to recognize the entire capital gain in the year of sale; gain is recognized pro-rata as principal is received over the term. This is the same statute used for seller-financed land contracts, structured legal settlements, and, since the late 2010s, Structured Installment Sales.
A traditional installment sale leaves the seller with buyer-default risk: the buyer owes the seller the future payments, and if the buyer defaults, the payments stop. That risk is the reason most California real estate sellers reject the idea immediately.
An SIS solves the risk by inserting two parties at closing:
The buyer wires full cash at closing, just like any normal sale. The seller no longer looks to the buyer for future payments — the seller looks to the A-rated carrier. The tax treatment under §453 stays the same.
Revenue Procedure 2005-26 is the IRS guidance that confirms the carrier-assignment structure preserves §453 installment-sale tax treatment. The IRS lays out the conditions: a qualified assignment, a designated qualified funding asset, restrictions on the seller's ability to accelerate, and proper Form 6252 reporting each year. Meet the conditions, get the treatment. The IRS published this 21 years ago. It has not been challenged or repealed.
"The Internal Revenue Service will treat a sale of property to a third party, followed by a qualified assignment under § 130(c) of the Code of the third party's obligation to make periodic payments, as an installment sale under § 453, provided that the conditions of this revenue procedure are satisfied." — IRS Rev. Proc. 2005-26 (paraphrased summary of operative paragraph)
A-rated structured-settlement carriers publish their own white papers walking through this — written for attorneys and CPAs, citing the statute and the revenue procedure section-by-section. The legal opinion behind each carrier's program is signed off by their general counsel. The reason these carriers stake their balance sheet behind it is simple: the law is settled.
It is not actually secret — and the goal here is the opposite of secrecy. The goal is to get this in front of your CPA, attorney, and financial advisor so they can verify it independently. But there are structural reasons most sellers have never been told about the technique, and they are worth naming so you understand the gap:
A handful of A-rated U.S. life carriers will write the funding annuity. Every other carrier you have heard of does not participate. A whole industry of advisors has no commercial relationship with the carriers that do, so it never comes up.
Your CPA's job is filing returns and giving tax advice. They are not insurance-licensed and do not receive compensation on annuity placements. If a client does not bring §453 up first, there is no business reason for a CPA to recommend a product they cannot place.
Trust-and-estate attorneys design structures (CRTs, IDGTs, GRATs). They draft documents. They do not hold insurance licenses and do not place carrier annuities. SIS is a placement, not a drafted document — so it sits outside their normal workflow.
An RIA or wealth manager is paid on assets under management. A $2M sale that funds a 20-year carrier annuity is $2M not sitting in their book of business. The incentive to introduce the strategy is, structurally, negative.
Most life-licensed agents focus on term, IUL, and retirement income. Property and business sales are a different referral world — they happen across CPAs, real estate brokers, and M&A attorneys. The agents licensed to place an SIS rarely sit at the closing table.
Even though the carriers backing it are household names with downtown skyscrapers, the placement bench is tiny. That is why the strategy feels obscure — not because the law is obscure, but because the people who can actually do the paperwork are.
This page exists so that your CPA, your attorney, and you can read the same statute and the same IRS revenue procedure and reach the same conclusion. Nobody benefits from a seller using a tax position their own advisors are not on board with.
When advisors review the underlying statute and Rev. Proc. 2005-26, the usual reaction is some version of: "Oh — yeah, that actually is legal. I just never had a client ask about it." That is the goal of this page. Not to bypass anyone. To put the same primary sources in front of everyone at the table so the decision can be made together.
An A-rated carrier's published SIS white paper is also available on request — written for legal review, with citations.
If their answer is "I have not looked at this in a while," you are not alone. This page is built to make that conversation easy. Bring the URL, the statute, and the revenue procedure cite. Decide together.
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