Content reviewed October 17, 2026 · Educational reference
Everything above, mapped back to the three pillars.
8.1 · By pillar — which authority does what
| Pillar | Core authorities | Supporting authorities |
|---|---|---|
| Qualifies as installment sale | §453(a)–(c); §453(f)(3); Reg. §15a.453-1, incl. (b)(3) (definition of "payment") | Pub. 537; Form 6252; §1274/§483 (interest); §453(i), §1245/§1250 (recapture limits); Holmes (1970) (third-party note = payment) |
| Eligibility screens / limits | §453(e), §453(g), §453(k), §453(l); §453A | §1239, §267(b), §318; §6621; TAM 9853002 |
| Obligor substitution is not a disposition | §453B; Rev. Rul. 75-457; Rev. Rul. 82-122; Cunningham | Rev. Rul. 74-157, 68-419; GCM 36299; PLR 201248008, 201144005; T.D. 8675; (outer limit: Burrell Groves) |
| No constructive receipt | Reg. §1.451-2; Oden; Williams | Pub. 537 escrow rules; §130/§72 architecture (annuity owned by assignment company) |
| Assignment mechanics | §130 (why NQA is required); §72(u)(3) | §104(a); NQA PLR line |
| Distinguishing the abusive cousin | REG-109348-22; §7701(o); §6011/§6111/§6112 | ECC 202118016; DOJ 2025 complaint (United States v. Crow, D. Idaho No. 1:25-cv-00177); Dirty Dozen (earlier lists, e.g., IR-2021-144; not on the 2026 list, IR-2026-30) |
8.2 · The obligor-substitution authority chain (chronological)
| Authority | Year | Holding |
|---|---|---|
| Cunningham v. Commissioner, 44 T.C. 103 (acq.) | 1965 | New-obligor assumption is not a disposition; focus on the seller's unchanged rights |
| Rev. Rul. 74-157 | 1974 | Multiple notes substituted for one — not a disposition |
| Rev. Rul. 75-457 | 1975 | Obligor substitution, same terms — not a disposition |
| Rev. Rul. 82-122 | 1982 | Obligor substitution + rate change — not a disposition |
| T.D. 8675 preamble, 61 Fed. Reg. 32926 | 1996 | §453B standard (not §1001) governs |
| PLR 201144005 | 2011 | Price + rate + payment-date changes — not a disposition |
| PLR 201248008 | 2012 | Maturity deferral + obligor substitution + rate change — not a disposition |
8.3 · The four conditions a compliant SIS must satisfy
The seller's payment rights are not materially altered — same schedule and amounts (Rev. Rul. 75-457/82-122; Cunningham; outer limit Burrell Groves).
The seller does not constructively receive the proceeds — no unfettered access to escrow or the annuity (Reg. §1.451-2; Oden; Williams).
The seller’s rights in the funding asset must be reviewed separately from the contractual installment receivable; assignment-company ownership does not itself establish a §72(u) exception or resolve every economic-benefit question.
The non-qualified assignment is executed at or before closing — before any right to a lump sum vests (§453; constructive-receipt doctrine).
A note on the weight of authority
- Statutes and regulations: apply the Internal Revenue Code and applicable valid Treasury Regulations, including effective dates, exceptions, and relevant judicial interpretations.
- Published IRS positions: revenue rulings state the IRS’s application of law to their facts and can be relied on in appropriate circumstances. IRS acquiescence indicates its response to a decision; neither is a substitute for comparing material facts.
- Judicial precedent: Tax Court and appellate decisions carry weight according to jurisdiction, precedential status, and subsequent treatment. A case’s holding should be distinguished from an analogy to an SIS.
- Nonprecedential IRS materials: PLRs, TAMs, and Chief Counsel Advice may not be used or cited as precedent under §6110(k)(3). Internal memoranda can illuminate reasoning but do not supply a general ruling for other taxpayers.
- Proposed rules: distinguish a proposal from an effective final rule. REG-109348-22’s scope and effective date must be verified; the absence of a final designation does not resolve substantive tax validity or all other reporting categories.
Sources: IRC §453 — installment method; Treas. Reg. §15a.453-1; IRC §1274 — certain debt issued for property; IRC §483 — unstated interest; IRC §1272 — original issue discount; IRC §453B — dispositions of obligations; T.D. 8675 — debt modifications, IRS Bulletin 1996-29; IRC §453A — interest and pledges; IRC §691 — income in respect of a decedent; IRC §1014 — inherited basis and IRD exception; IRC §72 — annuity taxation; NAIC — Risk-Based Capital for Insurers Model Act; NOLHGA — product coverage questions.
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