Estate of Duilio Costanza, Deceased Michael Costanza v. Commissioner of Internal Revenue

OPINION

GILMAN, Circuit Judge.

Duilio Costanza owned two parcels of real estate in Flint, Michigan, on one of which he operated a restaurant. In 1992, he decided to retire and move from Flint to his native Italy. After seeking advice from his attorney, he sold the properties and restaurant to his son, Michael Costan-za, in exchange for a self-cancelling installment note (SCIN) that was fully secured by a mortgage on the properties. The SCIN provided, among other things, that no further payments would be due if Duilio died before the note was fully paid.

Duilio died approximately five months…