Which of the following is identified as a wealth planning tool to transfer business value through a payment plan rather than a single lump sum?

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

Answer: (D)

This question targets how to move business value to a new owner over time rather than in one lump sum. An installment sale fits this idea best: the seller transfers the business but receives the purchase price in a series of payments, often with interest, over several years. Because payments come in over time, the seller can spread the tax liability—recognizing gain as each payment is received rather than all at once. This arrangement also provides a steady income stream for the seller and can be tailored to meet both parties’ cash-flow needs, which makes it a practical wealth-planning tool for succession or sale.

Other options serve different purposes. An ESOP transfers ownership to employees through a retirement plan structure and is funded gradually, but it’s not primarily about a private sale paid in installments to a single seller. A family limited partnership is about shifting wealth within a family for estate and gift-tax planning, not about a seller receiving payments over time. An S-corporation election changes how income is taxed at the entity level, not how ownership value is transferred over time.