It must be provided, however, that the term of the SCIN will be less than the life expectancy (actual) of the seller; otherwise, it will be taxed as a private annuity.
The uses of an installment sale or SCIN for estate planning purposes, as explained in this chapter, are based on the federal estate tax as in effect for years beginning before January 1, 2010, or after December 31, 2010.
A SCIN is appropriate in instances where the seller desires to retain a payment stream that will not continue beyond his or her death and may end at an earlier date.
Finally, the sons' basis was determined by reference to the SCINs' face amount, not the amount of installments actually paid prior to death.
Each son executed a self-canceling installment note (SCIN) requiring the payment of principal and interest over 20 years.
As a result, we are left in the uncertain position of wondering if another taxpayer with the correct form will prevail against the IRS, or if SCINs are now limited for all taxpayers.
Aggressive taxpayers can certainly use language in their SCIN that does not state that the note will be canceled.
Through the use of a self-canceling installment note (SCIN) an individual may eliminate the value of intrafamily installment obligations from the gross estate.
The Tax Court's rejection of the Service's position that the SCIN generated income in respect of decedent at the seller's death adds appeal to the use of a contingent sale.
With a SCIN, nothing will be included in the seller's gross estate (similar to a private annuity).
To properly establish a SCIN, the installments should be for a term shorter than the seller's life expectancy (this avoids characterization of the arrangement as a private annuity).
To do so could cause a SCIN
to be recharacterized as a private annuity, with tax treatment and considerations as described above.