5. ESTATE TAXES Omar Ruiz died in 2019. At the time of his death, he was single, and had a gross estate valued at $9.2 million. Six months after his death, the estate was valued at $9.0 million. Upon further research, you discover the estate incurred funeral and administrative expenses of $225,000, and his debts totaled $300,000. Omar bequeathed all of his estate to his children. Omar also made taxable gifts totaling $60,000 after 1976. REQUIRED: Calculate Omar's taxable estate and Omar's tax base. The goal is to produce the lowest taxable estate and tax base. 6. TAX PENALTIES Isabel Allende neglected to file her federal income tax return in a timely manner. She did not file her 2018 federal income tax return until December 4, 2019, 232 days after the due date of the tax return. The tax return was due April 15, 2019. She also did not file any extensions. Isabel's total tax liability was $27,890 and she had $25,000 federal income tax withheld from her salary. REQUIRED: Calculate Isabel's failure-to-pay penalty. Also calculate her failure-to-file penalty. 7. ANNUITY INCOME EXCLUSION Bjrn Ulvaeus retires at the age of 60. He purchases an annuity from the Virginia Life Insurance Company for $50,000. The annuity will pay Bjrn $350 per month for life. Required: Based on the above information, and using Table 3-1 in your textbook for an ordinary annuity, calculate Bjrn's annual exclusion amount. 8. INTEREST INCOME Gabriela inherited $20,000 of City of Snohomish bonds in February. In March, she received interest income of $250 from those bonds. Gabriela also decides to redeem Series EE U.S. savings bonds, which she had purchased several years ago. The accumulated interest on these bonds totaled $100. In addition, she also received $400 of interest on bonds issued by the city of Calgary, Canada. REQUIRED: Required: based on the above information, calculate the amount of gross income Gabriela must report on her Form 1040