[2] In addition, proper handling of the transaction will help the parties avoid problems with constructive receipt and economic benefit issues.
After Allstate Life stopped taking new annuity business in 2013,[citation needed] other structured sale opportunities arose.
Each installment payment to the seller has three components: return of basis, capital gain, and ordinary income earned on the money in the annuity.
Under the doctrine of constructive receipt, with a properly documented structured sale, no taxable event is recognized until a payment is actually received.
The structured sale must be documented, and money must be handled in such a way that the ultimate recipient is not treated as having constructively received the payment prior to the time it is actually made.
[citation needed] Internal Revenue Service Private Letter Ruling 150850-07, dated June 2, 2008, confirmed the IRS position the taxpayer does not constructively receive payment for tax purposes until the actual cash payment is made pursuant to a properly drafted non-qualified assignment.