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“IRS to List the Monetized Installment Sale — What Now?”

August 28, 2023

Tom Cullinan, John Kirbo and Erin Hines article “IRS to List the Monetized Installment Sale — What Now?,” in Tax Notes

In an article published in Tax Notes Federal on August 28, 2023, Atlanta-based Shareholder Tom Cullinan and Senior Counsels John Kirbo and Erin Hines explore how taxpayers and advisers will be affected by the government’s plan to make monetized installment sales a listed transaction, and they explain the options available to participants in those transactions.

The first three paragraphs of the articles are included below with permission from the publication. To read the full articles, subscribers may click here.

After repeated losses under the Administrative Procedures Act on listing transactions by notice,1 the IRS is changing tactics — albeit under protest — and listing transactions by regulation.2 That’s the case with monetized installment sale transactions, which are the target of proposed regulations released August 3.

This comes as little surprise. One consequence of the IRS designating a transaction as a listed transaction by regulation is that the government may disclose the IRS’s intention to do so long before the agency formally proposes published guidance. The administration’s spring 2023 unified agenda revealed that Treasury and the IRS were working on listing monetized installment sale transactions. This was confirmed by a document that appeared on the Office of Information and Regulatory Affairs website, indicating that Treasury intended to issue proposed regulations by December identifying monetized installment sale transactions as a listed transaction.

Even before issuing the proposed regulations, the IRS had begun to undertake serious enforcement efforts against monetized installment sale transactions. The recently proposed regulations will increase the pressure on participating taxpayers and material advisers even further. In this article, we explain what a monetized installment sale transaction is and what the IRS has said about it, and we provide some possible courses of action for taxpayers and their advisers.