Last year Salvador sold a tract of land $($basis of $$1,000,000)$ to Kate $($an unrelated party$)$ for

$$4,000,000,$ with a cash down payment of $$1,000,000$ and notes for the balance. The notes

carry a $3\mathrm{.}5\%$ rate of interest and mature annu$-$ally at $$1,000,000$ each over three years.

Salvador did not elect out of the installment method. Before any of the notes mature and when

they have a fair market value of $$2,800,000,$ Salvador dies and the notes pass to his estate. The

executor sells the notes for their fair market value. What is the Federal estate and income tax

result?