Question :
Dana Dodson died 31st October, 2009, with a gross estate of $6.7 million, debts of $200,000, and a taxable estate of $6.5 million. Dana ended no adjusted taxable gifts. All of her property passed under her will to her son, Daniel Dodson. The estate selects a June 30 year-end. Its receipts, gains, disbursements for the period ended June 30, 2011, were as follows:
Dividend income $27,000
Interest income from corporate bonds 18,000
Interest income from tax-exempt bonds 9,000
Gain on sale of land 10,000
Executor's fee (charged to principal) 4,000
Distribution to Daniel Dodson -0- Of the $27,000 dividends gets in the estate's first tax year, $7,000 were declared October 4, 2009, with a record date of October 25 and a payment date of November 4, 2009. The corporate bonds pay interest each 31st August and February 28. The estate collected $18,000 corporate bond interest in February 2010 and February 2011. The tax-exempt bonds pay interest each December 31 and June 30. The estate collected $4,500 in December 2009 and 2010 and $4,500 in June 2010 and 2011 from the tax-exempt bonds. Dana, a cash basis taxpayer, sold land in 2008 for a total profit of $60,000 and used installment reporting. She collected principal in 2008 and 2009 and reported profit of $30,000 on her 2008 return and $10,000 on her 2009 return. The estate collected additional principal in March 2010 and the remaining principal payment in March 2011. The profit attributable to the March 2010 and March 2011 principal collections is $10,000 per tax year. Ignore interest on the sale.
Determine the following:
a. Deductible executor's fee.
b. Net IRD and the IRD reported on the return for the period ended June 30, 2011.
c. Total Sec. 691(c) deduction if none of the debts are DRD.
d. Section 691(c) deduction deductible on the estate's income tax return for the period ended June 30, 2011.
e. Taxable income of the estate for its tax year ended June 30, 2011.
f. Marginal income tax rate for the estate for its tax year ended June 30, 2011.