Death of an IDIT Noteholder

Practitioners argue about what the income tax consequences are if the seller in an IDIT transaction¹ (Installment Sale to an Intentionally Defective Grantor Irrevocable Trust) dies before the note is paid off. Some commentators believe that this area is terra incognita, and all answers must be determined by analogy. Others, myself included, believe that existing rules are equal to the task, even though they were not created with IDITs in mind.