SIS vs. Other Deferral Strategies
How the SIS compares to 1031 exchanges, Opportunity Zones, DSTs, CRTs, plain seller notes, and a taxable lump sum.
The SIS is one of several ways to soften the tax hit on a big sale. A 1031 exchange defers tax but only for real estate bought on a tight clock. Opportunity Zones reward a 10-year investment but put capital at market risk. A Deferred Sales Trust places proceeds in a third-party trust for income over time; a monetized installment sale borrows against the note for cash now — two different structures, both drawing IRS scrutiny in their aggressive forms. A Charitable Remainder Trust is powerful but irrevocable and charity-focused. The SIS trades liquidity for guaranteed, insurer-backed income and broad asset eligibility — and, done correctly, sits firmly within settled tax law.
The master comparison
| Dimension | Structured Installment Sale (SIS) | Section 1031 Exchange | Opportunity Zone | Deferred Sales Trust | Monetized Installment Sale | Charitable Remainder Trust (CRT) | Lump Sum Taxable Sale |
|---|---|---|---|---|---|---|---|
| Asset eligibility | Broad capital assets | Real property only | Capital gains → fund | Broad | Broad | Broad | Any |
| Liquidity | Low (illiquid) | Low (in property) | Low (10-yr hold) | Low–moderate (trust income) | High (loan against note) | Income only | Highest |
| Income stream | Guaranteed periodic | Property cash flow | Fund distributions | Trust distributions | Loan now + installments | Annuity/unitrust | None |
| Credit risk | Insurer-backed; very low | Market/tenant | Market | Trust investment risk | Lender + tax risk | Trust investments | N/A |
| Complexity | Moderate | Moderate | High | High | High | High | Lowest |
| Legal certainty | High (settled §453) | High (statutory) | High | Moderate (IRS scrutiny) | Very low (listed transaction) | High | High |
| Business-sale fit | Strong | No | Limited | Possible | High risk | Possible | Yes |
Strategic selection framework
- Want to stay invested in real estate? Consider a 1031 exchange or a QOF.
- Charitably inclined and want a deduction? Consider a CRT.
- Comfortable with market risk for 10 years? Consider an Opportunity Zone fund.
- Want to exit, receive guaranteed income, and defer with high certainty? The SIS is the leading fit — especially for businesses, practices, and land that §1031 can't accommodate.
- Need all cash now? Take the lump sum; if comfortable with buyer credit risk, a plain seller note defers without insurer backing.
Two structures the SIS is often confused with are distinct from it and from each other. A Deferred Sales Trust places proceeds in a third-party trust that invests them and pays the seller over time; its aggressive forms draw IRS scrutiny. A monetized installment sale pairs §453 deferral with a loan against the note to deliver near-term cash, and is the subject of proposed listed-transaction regulations (REG-109348-22) and DOJ enforcement. A legitimate SIS is neither — it accepts genuine illiquidity in exchange for its settled tax treatment.