Which of the following is a business valuation freeze technique?

• A. Employee stock ownership plan (ESOP)
• B. S-corporation election
• C. Family limited partnership (FLP)
• D. Installment sale

Answer: (D)

Valuation freezing aims to lock in the business’s current value for transfer while letting future growth pass to heirs. An installment sale achieves this by selling the business to a related party (often a family member or a trust) and receiving payments over time through a promissory note. The sale price fixes the value at the moment of the transaction, so the seller’s estate isn’t inflated by future appreciation. As payments are received, any gain is recognized gradually, and the future growth belongs to the buyer, typically a younger generation. This makes it a classic tool for shifting wealth while retaining control during the seller’s lifetime. Other options serve different purposes: transferring ownership to employees via an ESOP, changing the entity’s tax status with an S-corp election, or using a family limited partnership for wealth transfer, but they don’t implement the same straightforward value freeze through a sale and note.