Diane loaned $250,000 to her son, Tom, five years before her death. Tom signed a promissory note, agreeing to repay the money “upon demand by Diane.” The note did not require interest, and it was not secured by any collateral:
a. Is the promissory note included in Diane’s gross estate? If so, at what value?
b. What if the note required interest at 8 percent per year, payable on December 15 each year? Assume that Tom has paid interest each year but has not repaid any principal. Diane dies on December 14. What is in her gross estate?
c. What if Diane’s will directs that all debts owed to her be canceled?
d. What if there was only an oral agreement and no promissory note?