What is a disguised sale?
A disguised sale is the IRS’s way of saying:
“You didn’t really contribute that asset, you sold it and owe tax on the gain.”
The rule exists to prevent people from hiding a taxable sale inside what’s supposed to be a tax-free contribution.
How Craft avoids it
Craft has two built-in safeguards to make sure your contribution is clearly treated as an investment, not a sale:
Five‑year lock‑up. You can’t withdraw cash or securities for five years. This lock up is much longer than the IRS’s two‑year safe‑harbor, showing it’s a long-term investment, not a quick transaction.
Real business risk. Your returns depend on how well the Pod actually performs. They rise and fall with the profits. There are no guaranteed paybacks tied to what you contributed, which proves you’re taking genuine investment risk.
Because your contribution stays in the Pod for years and you take real investment risk, the IRS sees it as a legitimate investment, not a sale.
Please read our full disclosures before making an investment decision.