What is included in the gross estate regarding notes receivable at the death of a decedent?

The correct answer is that both the remaining principal amount and accrued interest are included in the gross estate at the time of a decedent's death. In determining the gross estate, all assets that the decedent had ownership of are typically included, which encompasses notes receivable.

A note receivable represents an asset with a principal amount that is owed to the decedent. At the time of the decedent's death, any unpaid principal along with any interest that has accrued but has not yet been paid is considered part of the estate's value. This reflects the principle that the gross estate includes all economic benefits the decedent was entitled to at the time of passing.

Accrued interest becomes part of the financial value that can be claimed, similar to the treatment of other investment-related income or assets. The law seeks to encompass all financial interests the decedent had, ensuring equitable treatment of estate assets and debts.

The inclusion of both principal and interest ensures that the estate accurately represents the total financial standing at the time of death, which is critical for accurate estate tax calculations and settling of debts and distributions to heirs.