Although there is little case law or precedent on SCINs to draw upon, if the precedents set for private annuities apply as well to SCINs, it would appear the measuring life for a SCIN may be someone other than the seller. For instance, in special circumstances it might be desirable to use the buyer, the first of either the buyer or seller to die, or another third person as the measuring life or lives for the cancellation feature. It would appear that if the term of the note does not exceed the life expectancy of the reference life, whomever that may be, and the risk premium is computed based on that life, the SCIN should pass muster with the IRS.
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