Monetized Installment Sales: The Newest Member of the IRS’ “Dirty Dozen”

The IRS’ “Dirty Dozen is an annual list warning taxpayers of abusive tax arrangements, schemes, scams, and shams.

It’s no surprise to see “Monetized Installment Sales” (“M453”) join the “bad boys” of tax schemes as the IRS has recently alluded to the problematic structure (including the investigation of M453 promoters and the release of Chief Counsel Advice 202118016). M453’s are known for using third-party dealers to sell assets for immediate cash proceeds, while improperly deferring the tax for 30 years. In short, M453’s are abusive tax shelters disguised as traditional installment sales.

So M453’s are on the Dirty Dozen list, what does that mean?
  • If you are considering an M453 transaction: Don’t do it.
  • If you entered into an M453 transaction: Seek professional advice and take corrective action.
What if I do nothing?

If challenged by the IRS, accuracy-related and civil fraud penalties could amount to 75% of any underpayment of tax.

Taxpayers beware and take this warning seriously.There are plenty of perfidious promotors pushing these plans without pause, peddling in promises they cannot protect from IRS audits. If it sounds “too good to be true” seek professional advice from trustworthy, competent advisors. To find out more about M453 transactions and why they should be avoided, check out this recent article: Monetized Installment Sales: Just Say No.

Contact Us

Contact Withum’s Business Tax Services Team to help address your questions regarding M453 transactions.