Capital Gains Strategy
Don't let the IRS claim a third of everything you've spent a lifetime building.
When you sell a business, investment property, or appreciated asset, capital gains taxes can consume 30–37% of your proceeds before you see a dollar. There's a legal, IRS-recognized strategy that changes the equation and Ascend Financial is one of a small number of firms nationally qualified to manage the investment side of it.
37%
Max combined federal & state tax exposure
IRC §453
IRS-recognized installment sale authority
$1,000,000+
Typical minimum qualifying transaction
3-Part
Expert team: DST firm · trustee · tax attorney
The High-Stakes Reality
Why selling your high-value asset without a strategy is a costly mistake
23.8%
Federal Long-Term Capital Gains Rate, Before State Adds More
The top federal rate on long-term capital gains is 20%, plus the 3.8% Net Investment Income Tax for higher earners. Add state taxes and many sellers in California, New York, or Texas face a combined rate approaching or exceeding 37%. A $3M exit can mean a $1.1M tax bill due in April.
45 days
The 1031 Exchange Window: Strict, Inflexible, and Real Estate Only
If you're hoping to defer taxes with a 1031 exchange, you have just 45 days to identify replacement property and 180 days to close. And since the Tax Cuts and Jobs Act of 2017, 1031 exchanges are restricted to real estate only, your business sale or stock portfolio doesn't qualify.
Expertise
What Most Advisors Know About Deferred Sales Trusts
The Deferred Sales Trust is a powerful, IRS-recognized tool, yet most financial advisors and CPAs have never structured one. It requires a specialized DST design firm, a licensed trustee, and a qualified tax attorney working in concert. Most clients only discover it after it's too late to act.
How It Works
See exactly where your money goes and how it comes back to you
Step through each phase of the DST, from asset transfer through IRS-compliant installment payments, to see how pre-tax capital is preserved, invested, and returned to you over time.
1
The Deferred Sales Trust
A legal framework that keeps your full proceeds working before tax
A Deferred Sales Trust (DST) is an installment sale arrangement authorized under IRC Section 453. Instead of receiving the sale proceeds directly, triggering an immediate tax, you transfer the asset to an independently managed trust. The trust sells the asset, holds the proceeds, and pays you structured installments over time. You pay tax only as you receive payments, allowing the full pre-tax capital to remain invested and compounding on your behalf.
Unlike the 1031 exchange, a DST applies to any appreciated asset, real estate, a privately held business, stocks, or commercial property. There's no 45-day clock, no replacement property requirement, and no forced reinvestment into a single asset class.
Works for real estate, businesses, and investment portfolios, not just property
No IRS deadline pressure or replacement property identification window
Tax is spread across installment payments, lowering annual bracket exposure
Pre-tax proceeds remain invested and compounding inside the trust
Structured to support estate planning and generational wealth transfer
Ascend's Role in Your Deferred Sales Trust
Design & Structure: We work in close partnership with a specialized DST design firm, our strategic partner, that architects the Deferred Sales Trust, drafts the installment sale note, and coordinates the full legal framework of the transaction.
Investment Fund Management: Once the trust is funded, Ascend Financial manages the investment portfolio held within the trust, building a diversified strategy designed to grow pre-tax assets and generate the income stream that pays your installments.
Trustee Coordination: We work in close collaboration with the independent trustee throughout the trust's life, ensuring investments are appropriate, distributions are executed properly, and fiduciary obligations are met.
IRS Compliance Oversight: Our process includes ongoing coordination with the trust's tax attorney to maintain compliance with IRC Section 453, filing requirements, and IRS audit defense, so your deferral strategy stays intact.
Holistic Retirement Integration: Your DST income stream is coordinated with your broader financial plan, Social Security timing, RMD strategy, estate planning, and tax-bracket management all considered together.
Note on minimum thresholds: The DST strategy is most effective for transactions totalling $1M or more in value. If you're below this threshold, we'll explore alternative strategies during your complimentary review.
Common Questions
What our clients ask before moving forward
Yes. The Deferred Sales Trust is a legal installment sale structure authorized under IRC Section 453 of the Internal Revenue Code. It has been reviewed by FINRA and the SEC with no adverse findings, allowing broker-dealers to approve their advisors to participate. The tax attorneys involved provide audit defense as part of the engagement. While the IRS has not issued a private letter ruling on DSTs, the underlying installment sale rules that form its legal foundation are well-established tax law.
A 1031 exchange requires you to identify replacement real estate within 45 days and close within 180 days — under significant time pressure. Since 2017, 1031s are limited to real estate only. A Deferred Sales Trust has no identification deadline, no replacement property requirement, and works across all asset types including businesses, stocks, and commercial property. It's also far more flexible in how you can invest and receive proceeds.
Our strategic DST design partner — a specialized firm we work with on these structures — architects the trust, drafts the installment sale note, and coordinates with the tax attorney to establish the legal framework. Ascend Financial manages the investment portfolio held inside the trust — building and overseeing the diversified strategy that grows the pre-tax capital and generates your installment income. We also serve as your ongoing financial advisor, integrating the DST income with your broader retirement and estate plan.
You pay capital gains tax only as you receive installment payments from the trust — not at the time of sale. Each payment is allocated between return of basis (tax-free), capital gain (taxed at capital gains rates), and interest (taxed as ordinary income). This spreads your tax liability over many years, potentially keeping you in lower tax brackets each year and significantly reducing your total tax burden over time.
Liquidity is a trade-off to understand clearly. You receive structured installment payments according to your note terms — typically monthly — but you do not have immediate access to a lump sum. Payments can begin immediately or after a deferral period, and the term and payment schedule are established in advance. The DST works best for sellers who want reliable income over time rather than immediate access to all sale proceeds at once.
The DST trust must be in place and the asset transferred to the trust before the sale closes. Once you've actually received the proceeds from a sale, it's too late to implement the strategy. We recommend initiating the process no later than 4–6 weeks before your anticipated closing date. If you're in the early stages of a sale negotiation, now is the ideal time to call us — even if closing is months away.
Educational Resources
Expand your knowledge on capital gains strategy
Time-Sensitive Strategy
Your closing date is the deadline. Let's talk before it's too late.
The Deferred Sales Trust must be in place before you receive sale proceeds. If you have a sale under negotiation or closing on the horizon, your window to act is now. Schedule a complimentary, no-obligation review with our team.
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