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IRS Issues Proposed Regulations to Target Monetized Installment Sale Transactions

S.J. Steinhardt
Published Date:
Aug 4, 2023

The IRS has issued proposed regulations concerning monetized installment sale transactions.

The proposed regulations, published in the Federal Register, would list certain types of these sales as “listed transactions” that must be reported to the IRS. In one of its “Dirty Dozen” lists, the IRS cited monetized installment sales as a scheme aimed at high-income filers.

“In these potentially abusive transactions, promoters find taxpayers seeking to defer the recognition of gain upon the sale of appreciated property,” the IRS stated. “They facilitate a purported monetized installment sale for the taxpayer in exchange for a fee. These installment sales occur when an intermediary purchases appreciated property from a seller in exchange for an installment note. The notes typically provide for payments of interest only, with principal being paid at the end of the term. In these arrangements, the seller gets the lion's share of the proceeds, but improperly delays the recognition of gain on the appreciated property until the final payment on the installment note, often years later.”

The proposed regulations would require taxpayers that participate in monetized installment sale transactions and substantially similar transactions, and persons who act as material advisers with respect to these transactions, to disclose the transactions in accordance with the regulations issued under sections 6011 and 6111 of the Internal Revenue Code. Material advisers would also be required to maintain lists as required by section 6112.

Comments, either electronic or written, must be received by Oct. 3. Commenters can submit electronic submissions via the Federal eRulemaking Portal at (indicate IRS and REG–109348–22) by following the online instructions for submitting comments. Commenters can send paper submissions to: CC:PA:LPD:PR (REG–109348–22), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044. Once submitted to the Federal eRulemaking Portal, comments cannot be edited or withdrawn. The Department of the Treasury and the IRS will publish for public availability any comments to the IRS's public docket. 

A public hearing is scheduled to be held on Oct. 12, at 10 a.m. ET. The hearing is scheduled to be conducted in person, but the IRS will provide a telephonic option for individuals who wish to attend or testify at the hearing by telephone. Requests to speak and outlines of topics to be discussed at the public hearing must be received by Oct. 3,.

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