The Structured Sales Authority

New York Life Doesn't Sell Structured Sale Annuity

Those who buy cheap top soil can't expect to bear fruit. An article entitled " Structured Sale Annuity Tax Minimization Methods" was recently posted on a website called New York Life Annuities, which uses the URL www.newyorklifeannuities.net, yet appears to have nothing to do with New York Life Insurance company, one of the oldest and most respected life insurance companies in the world.

Furthermore, New York Life Insurance Company does not issue structured sale annuities. At this time a structured sale annuity is only available through appointed agents of Allstate Life Insurance Company and Allstate LIfe Insurance Company of New York via  the Allstate International Assignment Ltd. non qualified assignment facility

The registrant of the website is in Jakarta, Indonesia. To the best of this author's knowledge, structured sales are not found outside of the United States.

Structured sales are an improvement on the installment sale method of disposition of real estate of business interests.

 

 

 

Structured Sales for Buyers/Sellers: Deferred Comp for Real Estate Brokers

Structured sales expert John Darer of Stamford, Connecticut discusses how the use of a structured installment sale can a useful way to defer capital gains for New York City, Westchester, Long Island, Fairfield County and other Connecticut sellers of low basis/ high value real estate or business interests.

Real Estate agents and brokers who earn contingent commissions also have a unique way to plan for their futures or smooth out cash flow

 

Reason to Do A Structured Sale: Sudden Money Story of Martin Family's Swift and Hard Fall From Grace

They sold a business for $14 million in 1998 and are now broke having "faced temptations to indulge, with the complexities and pressures of new wealth. And a pounding recession pummeled the value of their real estate and new financial investments, rendering their properties unaffordable. The fortune evaporated in little more than a decade, according to The New York Times' Geraldine Fabrikant, in a story published November 29, 2010  (See Family's Fall From Grace s Swift and Hard)

In 2010, selling business owners can enter into a structured installment sale, which can serve to functions: (1) mitigate capital gains taxes in year one and earn interest on the amount that would otherwise be going to taxes in year one  (2) mitigate dissipation risk by providing a guaranteed income stream for a period of years, or for life. A partial structured sale is also possible as is an innovative non annuity deferred payment facilty geared for structured sales, where the timing of installment payments is fixed, but the amount distributed from a managed account is based on a determinable formula.

For more information about structured sales please contact John D. Darer, CLU ChFC CSSC RSP at 4structures.com, LLC  at 203-325-8640 (toll-free outside of CT at 888-325-8640)

Constructive Receipt and Structured Sales

Constructive receipt of income should be avoided if one wants to conclude a successful structured sale of a low basis/high value business or real estate.

The doctrine of constructive receipt  permits the government to tax income before that income is actually received. The doctrine says in part that, even though you may not have the proceeds of your sale physically in your hand or in your bank account, the fact that you could have had it if you had simply requested it, means that for tax purposes, you did have it. For example, if you sign a sales contract that calls for a single cash amount (i.e.does not spell out the specific installment payments) and you deliver the signed document to the buyer.

A Structured Sale is a valuable tool to assist in disposition of real estate in situations where §1031 exchanges prove to be a hindrance.  Structured Sales help mitigate the amount of equity subject to the current tax on business or property sales that qualify for installment treatment (pursuant to IRC §453). 

For more information please contact John Darer, CLU ChFC CSSC RSP toll-free at (888)325-8640

Structured Installment Sale Opportunity To Mitigate Capital Gains Exposure Created By IRC 121 Amendment under Housing and Economic Recovery Act of 2008

The Housing and Economic Recovery Act of 2008 ("HERA"),  Public Law 110-289 , HR 3221, was signed into law on July 30, 2008. Included in HERA is an amendment to Internal Revenue Code Section 121 ("IRC 121") designed to preclude taxpayers from excluding the gain on the sale of a residence attributed to periods of "nonqualified use" (any period after 2008 when the residence is not used as a principal residence).

Effective January 1, 2009, the purpose of the IRC 121 amendment was to close the loophole that permitted a taxpayer to sell a primary residence and utilize the full home sale capital gains tax exclusion ($250,000 for single, and $500,000 for married taxpayers); then convert an existing vacation or rental property into a primary residence, satisfy the two of the five year residency requirement, and then sell the new primary residence and again utilize the full home sale capital gains tax exclusion.

Under the new IRC Section 121, a "nonqualified use' period will exclude:

1.  the 5-year period after the last date that the residence is used as a principal residence;
2.  any period (not in excess of an aggregate of 10 years) during which the taxpayer serves on military duty; and
3.  any period of temporary absence (not in excess of an aggregate of 2 years) resulting from a change of employment, health conditions, or other unforeseen circumstances (death of a spouse, etc.) specified by the Secretary. In addition, the exclusion will not apply to the extent the gain is attributable to depreciation allowed for rental or business use of a principal residence for periods after May 6, 1997.                                                                   The closure of the loophole means an added capital gains exposure which may be mitigated, for some tax payers, through the use of a structured installment sale (a/k/a "structured sale). Click here for our structured sales flow chart.

For more information about structured installment sales please contact John Darer at 888-325-8640

Installment Sales, Structured Sales and the 2008 Elections

Installment Sales between related parties for amounts under $5,000,000 ($10,000,000 married couple) present an interesting financial planning option if Barack Obama is elected President. Obama plans to maintain Bush tax cuts, except for those earning in excess of $250,000 annually. it is expected that there will be increases in the capital gains and income tax rates.

An increase in capital gains tax rates will make structured sales more attractive to sellers of low basis/ high capital gains properties and businesses. It will however give those selling pause in engaging such transactions today. In some cases it may make more sense to pay the taxes now at the lower rate, rather than defer recognition and then pay a higher tax later. In doing so there is a recognition that the buyer is only obligated to make the installment payments when due.

Each person's situation is unique and calculations should be performed by and discussed with a financial professional.

For those with existing installment sales, IRC 453(d) states that a taxpayer is allowed to elect out of their installment sale and pay the tax now. The individual is required to make an election by October 15th of the following year on an extended return, this giving the potential for hindsight on their installment sale. A taxpayer will have time to assess their situation in light of any tax changes that have occurred related to  tax rates.

Mom and Pop Flop With Bogus "Exit Strategy" Scheme

A recent IRS Private Letter Ruling exposes a couple's bogus "exit strategy" promotion scheme. This has nothing to do with a legitimate structured sale, but it is instructive of what kind of bogus schemes are out there and what not to do.

The scheme involved the exhange of Real Estate, securities and annuities to what was supposed to be a charity. The so-called "Tax Deductible Installment Plan" was a product that purportedly promised those solicited all of the following:

• generous income tax deduction
• tax favored income
• elimination of portion of any capital gains
• a guaranteed income that grows every year
• estate tax reduction

The IRS observed that the "activities of primarlily performing services for individuals who wish to exhange assets for annuity plans as an estate planning tool" and thus the company (i.e. Mom and Pop) were performing commericial services for these individuals. Here's the kicker..."Because less than one half of one percent of the funds received go to charity, this does not render your activities as charitable".

In its final determination on PLR 200818023 released May 2, 2008, the IRS stated " Because you do not qualify for exemption under 501(c)(3), donors MAY NOT deduct contributions to you under Section 170"

"you must file Federal income tax returns for the years listed within 30 days of this letter".

To quote Lynyrd Skynyrd "Oo-ooh That Smell" ( performed by Glass House, ironically at a "charity fund raiser")

Allstate Cos. Florida Suspension No EFFECT ON STRUCTURED SALES

DealFlow Media reported on its Structured Settlements Wire last Tuesday that the insurance commissioner in the state of Florida has announced that he will resume the suspension of the Allstate Cos. to write new business in the state until the company is in full compliance with subpoenas that were issued in October. THEN, on Monday April 21, 2008, the First District Court of Appeals in Tallahassee denied Allstate's motion for a rehearing.

The suspension applies to the following Allstate companies, and it only suspends the companies from writing new business in Florida.

Allstate Floridian Insurance Co.

Allstate Indemnity Co.

Allstate Property & Casualty Insurance Co.

Allstate Insurance Co.

Allstate Floridian Indemnity Co.

Allstate Fire and Casualty Insurance Co.

Encompass Insurance Co. of America

Encompass Indemnity Co.

Encompass Floridian Insurance Co.

Encompass Floridian Indemnity Co.

PLEASE NOTE THAT:

While the appearance in the DealFlow Media Structured Settlements Wire might lead one to believe that the commissioner's action affects Allstate's structured settlement operation, the fact is that NONE OF THE ABOVE COMPANIES WRITES STRUCTURED SALE ANNUITIES!

Allstate Life Insurance Company is the  annuity issuer underwriting Allstate structured settlements, Allstate non qualified assignments and Allstate structured sales annuities in the State of Florida.

Prudential announcement leaves Allstate International Assignments the only entity accepting assignments for Structured Installment Sales

Prudential Insurance Company of America ("Prudential), one of the two entities that issues Structured Sales annuities to fund installment sales obligations has been working on requesting a Private Letter Ruling (PLR) for Structured Sales. Prudential recently had a pre-filing Hearing with the U.S Internal Revenue Service, a crucial step in this process.

It announced today by Pruco Assignment Corporation, the Barbados based entity that takes on installment sales obligations funded by Prudential structured sales annuities, "that as a result of the progress at the Hearing, Prudential has decided to suspend the underwriting of annuity contracts for structured sales to enable them to reassess the nature and structure of the annuity contract when used for this purpose. This moratorium is indefinite at the present time.In light of this, Pruco Assignment Corporation will NOT be accepting assignments for Structured Sales transactions until further notice".

Both Pruco and Prudential stated that they remain committed to the structured sales market, and are hopeful that shortly, they will again be able to facilitate Structured Sales assignments.

This leaves Allstate International Assignments, Ltd as the only entity that will accept the assignment of installment sales obligations funded by structured sales annuities.

More information on structured installment sales

Structured Sales Annuity Issuer Gets "Fitched" Up

Fitch Ratings services has upgraded the life company group of Prudential Financial, Inc. from AA- to AA. One of Prudential's group of life companies, The Prudential Insurance Company of America, is one of the leading issuers of structured settlement annuities, structured sales annuities, structured attorney fee annuities and other non qualified periodic payments.

This has been a banner year or so for accolades involving Prudential. Last year they got their A+ back from AM Best. Earlier this year Prudential pipped Northwestern Mutual as the most admired life insurance company by its peers. The company seems to be moving in a very positive direction.

Financial security ratings such as those provided by Fitch are helpful to purchasers of annuities involving payment obligations of long duration.