When people call Reef Point with questions about the Deferred Sales Trust (DST) and whether this unique, proprietary tax strategy may be right for them when they sell a highly appreciated asset, one question they frequently ask is: How much lead time do I need to give the Estate Planning Team to construct my own DST?
Deferred Sales Trust
As a Certified Public Accountant, you deal with your clients’ complicated financial issues on a daily basis. These usually involve tax issues and can be quite challenging, particularly as tax laws, rules and regulations continue to change.
As a savvy investor, you likely already know that Section 453 of the Internal Revenue Code authorizes you to utilize the installment sale method when you sell a highly appreciated assets so as to obtain favorable capital gains treatment. What you may not know, however, is that when you utilize the Deferred Sale Trust rather than a regular installment sale, this legal, safe and proprietary tax strategy gives you many additional benefits.
You have probably read several blogs and other information on this site that extol the benefits of utilizing the Deferred Sales Trust when selling your highly appreciated assets. You may be considering its use yourself in one of your upcoming sales. Before proceeding further with your thinking process, however, you should know that the DST is not for everyone or for every sale transaction.
The Internal Revenue Service defines an installment sale as one in which “you’ll receive at least one payment after the tax year in which the sale occurs.”