Question: In its first tax year, the Vasquez Estate generated $50,000 of taxable interest income and $30,000 of tax-exempt interest income. It paid fiduciary fees of

In its first tax year, the Vasquez Estate generated $50,000 of taxable interest income and $30,000 of tax-exempt interest income. It paid fiduciary fees of $8,000. The estate is subject to a 35% marginal estate tax rate and a 40% marginal income tax rate.

a. What is the "default" treatment of the payment of the fiduciary fees?

b. How should the executor assign the deductions for the payment of the fees? Do not round your intermediate computations. The most favorable allocation would be $ _______deduction assigned to the estate return and $_______ assigned the estate's income tax return.

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