Betty's adjusted gross estate is $9 million.The death taxes and funeral and administration expenses of her estate total $1.2 million.Included in Betty's gross estate is stock in Heron Corporation, valued at $3.3 million as of the date of her death in 2012.Betty had acquired the stock six years ago at a cost of $810,000.If Heron Corporation redeems $1.2 million of Heron stock from the estate, the transaction will qualify under § 303 as a redemption to pay death taxes and receive sale or exchange treatment.

Question

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The transaction will qualify under § 303 as a redemption to pay death taxes and receive sale or exchange treatment as long as the amount redeemed does not exceed the estate's death taxes and funeral and administration expenses, which is $1.2 million in this case. The fact that Betty acquired the stock six years ago at a cost of $810,000 is irrelevant to this determination.

Betty's Adjusted Gross Estate Is $9 Million