PROBLEM #1 Joe, a retired aeronautical engineer with NASA, lived in Houston, Texas. When Joe was diagnosed with terminal cancer, he realized that he would need assistance during his last months/years of his life. Joe asked his brother, Mark to move to Houston and live with/care for him. Joe promised Mark that Joe would leave Mark a specific bequest of $750,000 if Mark agreed to live with and care for Joe. Mark agreed to this plan and he moved to Texas and lived with and cared for Joe for the duration of Joes life. Unfortunately for Mark, Joe never amended his Last Will & Testament to reflect their agreement so Mark was left with nothing under the Will when Joe passed away. Mark filed a lawsuit against Joes estate after Joes death to enforce their agreement. Marks lawsuit was successful and he received $750,000 from Joes estate. Determine the tax consequences of the $750,000 payment for both Mark and Joes estate.

NOTE: Use only the Internal Revenue Code for your research. Include with your response to each question, a paragraph with an explanation of how you arrived at your solution (i.e. walk me through your research steps). Note: You may need more than one Code section for a complete answer.