Digital assets
Cryptocurrency Tax Deferral
Crypto can't use a 1031 exchange — but the installment method can defer the gain.
The problem
Digital assets don't qualify for a 1031 exchange
The Tax Cuts and Jobs Act of 2017 limited 1031 like-kind exchanges to real property only. Cryptocurrency and other digital assets are treated as property but are not real estate, so a 1031 exchange is not available to defer the gain on a crypto sale.
That leaves a large, often highly-appreciated position exposed to capital gains tax in the year you sell. The applicable deferral route for digital assets is the installment method under IRC Section 453 — the same method the 537 Installment Sale Trust is built on.
The solution
How the 537 IST applies to digital assets
You sell your digital assets to an irrevocable trust in exchange for a secured installment note. The trust liquidates the position and reinvests the proceeds, paying you over time. Because an independent trustee holds the proceeds, you avoid constructive receipt and recognize gain as payments are received rather than all at once.
The structure follows the installment method in IRC §453 and IRS Publication 537. Read the Legal Memorandum →
What a digital-asset holder gains
A deferral route for digital assets, which cannot use a 1031 exchange
Recognize gain over the payment period under the installment method (IRC §453)
Convert volatile holdings into a structured income stream
No like-kind reinvestment requirement and no 45/180-day deadlines
Independent fiduciary trustee — no constructive receipt of proceeds
Diversify out of a single-asset position through the trust
Coordinates with estate planning and wealth transfer
Grounded in IRC §453 and IRS Publication 537
How it works
Property or
Business SaleEscrow &
Closing537 Installment
Sale TrustInstallment
Payments to You
Consultation
We review your holdings, basis, and goals to confirm a 537 IST fits your digital-asset sale.
Trust Formation
An irrevocable trust is established with an independent trustee before the disposition.
Installment Sale
You sell the digital assets to the trust in exchange for a secured installment note.
Liquidation
The trust sells the assets at fair market value through a compliant exchange or OTC desk.
Reinvestment
Proceeds are reinvested by the trustee into a diversified portfolio aligned to your goals.
Income Stream
You receive installment payments over time, deferring gain recognition across the term.
See the deferral on your position
Model your digital-asset sale and compare an outright sale against a 537 IST, side by side.