A proven tax deferral strategy with 3,800+ successful transactions and zero IRS audits
The 537 Installment Sale Trust is a trust arrangement that leverages IRC Section 453 — the installment sale method that has governed tax deferral since 1921. When you sell an appreciated asset, instead of paying 20-40% in immediate taxes, the trust receives your sale proceeds and issues you a secured promissory note.
The name comes from IRS Publication 537, which is the IRS's own guide to installment sales. This is not a loophole or aggressive tax shelter — it's a strategy built on over a century of established tax law, originally derived from Ernst & Ernst (now Ernst & Young) strategies from the 1970s.
Your sale proceeds are professionally managed through the Model Q® investment strategy, generating quarterly income while the full pre-tax amount continues to compound — including the 20-40% that would have otherwise gone to the IRS.
Four straightforward steps from asset sale to tax-deferred income
You transfer your appreciated asset to the 537 IST in exchange for a secured promissory note. No tax is triggered at this stage because no gain is recognized — this is a carryback transaction against the trust.
The IST sells the asset to the final buyer at the same price. Because the trust purchased and sold at the same price, there is no gain to the trust — the transaction is tax-neutral.
The full pre-tax proceeds are invested through the Model Q® dual-asset strategy — a 50/50 split between professionally managed ETFs and Fixed Index Annuities, cleared through Charles Schwab and A-rated carriers.
The trust pays you quarterly interest on your secured promissory note — typically 6% annually. Taxes are deferred until you actually receive principal payments, and the note can be refinanced at maturity to continue deferral indefinitely.
Built on established tax law, not loopholes — with structural safeguards that ensure compliance
The installment sale method has been part of the Internal Revenue Code since 1921. IRS Publication 537 is the IRS's own guide to these transactions. This is not a novel or untested strategy.
The seller cannot own the trust, cannot be the trust beneficiary, and receives only a secured promissory note — not cash. The trust has a genuine business purpose with independent third-party administration.
Unlike some aggressive tax deferral structures, the 537 IST uses no third-party loans or artificial financing. The transaction is a genuine installment sale with real economic substance.
Independent Trustee
CB Admin Services or IST Admin Services — professional, third-party fiduciaries
Bank Custody
Separate trust bank account at City National Bank with DACA protection
Insurance Coverage
Fidelity Bonds and Errors & Omissions (E&O) insurance on all administration
Authentication
DocuSign authentication, mobile app verification for all wires and ACH transfers
Annual Reporting
Trust tax returns prepared by CPA, K-1 and 1099-INT issued to note holders
Note Holder Rights
Approve/reject investments, dictate income timing, refinance or terminate at will
Why thousands of sellers choose the 537 IST over traditional sale strategies
The full pre-tax amount stays invested and compounds — including the 20-40% that would have gone to taxes. Three layers of compounding: interest on principal, interest on interest, and interest on deferred taxes.
Receive predictable quarterly income at a 6% annual withdrawal rate — significantly higher than the traditional 4% retirement rule. Income sourced from ETFs when markets are up, annuities when markets are down.
Trust assets are segregated in separate bank accounts with DACA protection, Fidelity Bonds, and E&O insurance. Professional fiduciary administration provides an additional layer of security.
If a 1031 Exchange fails within the 45-180 day window, proceeds can be redirected into a 537 IST. Q1031's qualified intermediary language is approved for reversion to the installment method.
The promissory note qualifies as a "security" under Reves v. Ernst & Young (1990). Securities receive a step-up in basis at death — eliminating all deferred taxes for your heirs.
No surrender charges, no penalties, no lock-up periods. Access your funds within 3-7 business days. Refinance your note at maturity or take partial distributions anytime.
How the 537 IST compares to other tax deferral and trust strategies
| Feature | 537 IST | 1031 Exchange | Delaware Statutory Trust | Irrevocable Trust |
|---|---|---|---|---|
| Liquidity | 3-7 days | None (tied to property) | Limited (10+ year hold) | None (irrevocable) |
| Tax Deferral | 100% deferred | 100% deferred | 100% deferred | Partial |
| Step-Up in Basis | Yes (note = security) | Yes (at death) | Yes (at death) | No |
| Replacement Property Required | No | Yes (like-kind) | Yes (DST property) | N/A |
| Strict Deadlines | Must setup before close | 45/180 day rules | 45/180 day rules | None |
| Income Stream | 6% quarterly | Rental income only | 4-6% annual | Varies |
| Control | Full note holder rights | Full property owner | Passive investor | No control |
| Management Required | Professional (hands-off) | Active (tenants, repairs) | Passive | Trustee managed |
A dual-asset approach designed for consistent income with downside protection
Professionally managed by Christian Ramsey, AIF® at institutional level — similar to how CalPERS and CalSTRS manage public pension assets. Securities cleared through Charles Schwab.
Principal protection with upside market participation through A-rated insurance carriers including Nationwide, Allianz, Fidelity, Athene, North American, and Penn Mutual. Eliminates sequence-of-returns risk.
Your base investment returns from both ETFs and fixed index annuities.
Reinvested earnings compound over time, accelerating growth year over year.
The 20-40% that would have gone to the IRS also earns returns — this is the compounding advantage unique to tax deferral.
How the 537 IST can eliminate deferred taxes entirely for your heirs
The secured promissory note you hold against the 537 IST qualifies as a “security” under the landmark Supreme Court case Reves v. Ernst & Young (1990). Why? Because the note has variable/upside potential — it can increase in value beyond its face amount.
Securities receive a step-up in basis at death. This means when your heirs inherit the promissory note, its cost basis is reset to its current fair market value. The result: all deferred capital gains taxes are eliminated.
This is a critical differentiator from Deferred Sales Trusts, which use fixed installment notes without upside participation. Fixed notes do not qualify as securities and do not receive a step-up — meaning heirs inherit the deferred tax liability.
The 537 IST is designed for sellers of highly appreciated assets across multiple categories
Exit active management of rental properties — no more tenants, toilets, and trash. Consolidate multiple properties into one trust. Extract basis on transactions over $1M.
Examples: Rental properties, commercial buildings, multi-family, land
Selling your business doesn't have to mean losing 20-40% to taxes on day one. Structure your exit to maintain comparable income without the 60-80 hour work weeks.
Examples: Sole proprietorships, partnerships, LLCs, S-Corps, C-Corp stock sales
For homes valued above the federal exclusion ($250K single/$500K married), the 537 IST defers gains on the amount exceeding the exclusion. Extract your original basis + improvements tax-free.
Examples: High-value primary residences, vacation homes
If your 1031 Exchange is at risk of failing — can't find replacement property, deadline approaching — the 537 IST serves as a safety net. Convert to installment method within the exchange window.
Examples: Exchanges at risk of the 45-day or 180-day deadline
Art, jewelry, patents, cryptocurrency, and other appreciated personal property qualify for installment sale treatment. Minimum transaction size is typically $500,000.
Examples: Art collections, intellectual property, crypto holdings