Assets intended for charity upon death are treated in which way concerning the gross estate?

Assets intended for charity upon death are included in the gross estate but are eligible for a charitable deduction. This means that while these assets are part of the total value of the deceased's estate for purposes of calculating estate tax liability, the estate can offset that value with the amount donated to charity.

The rationale behind this treatment is that the government encourages charitable giving by allowing estates to deduct the value of charitable bequests when determining the taxable estate. This can significantly reduce the estate tax burden. By ensuring that these assets are included in the gross estate, the IRS can maintain an accurate assessment of the estate's total wealth before any deductions.

In contrast, the other options suggest different treatments that do not align with tax laws regarding charitable donations upon death. Assets being excluded from the gross estate, taxed at a higher rate, or reported separately do not reflect the established principles governing estate planning and charitable contributions. Thus, the inclusion within the gross estate coupled with eligibility for a charitable deduction is the correct approach under the relevant tax regulations.