Clay, who was single, died in 2013 and has a gross estate valued at $8,500,000. Six months after his death, the gross assets are valued at $9,000,000. The estate incurs funeral and administration expenses of $125,000. Clay had debts amounting to $150,000 and bequeathed all of his estate to his children. During his life, Clay made no taxable gifts.

a. What is the amount of Clay's taxable estate?

b. What is the tax base for computing Clay's estate tax?

c. What is the amount of estate tax owed if the tentative estate tax (before credits) is $3,235,800?

d. Alternatively, if, six months after his death, the gross assets in Clay's estate declined in value to $7,500,000, can the administrator of Clay's estate elect the alternate valuation date? What are the important factors that the administrator should consider as to whether the alternate valuation date should be elected?