Santiago Hernandez was 65 when he retired in 2014. Maria, his wife of 40 years, passed away the next year. Her will left everything to Santiago. Although Maria's estate was valued at $2,250,000, there was no estate tax due because of the 100 percent marital deduction. Their only child, Samuel, is married to Luna. They have four children, two in college and two in high school. In 2015, Santiago made a gift of Microsoft stock worth $260,000 jointly to Samuel and Luna. Because of the two $14,000 annual exclusions and the unified credit, no gift taxes were due. When Santiago died in 2018, his home was valued at $800,000, his vacation cabin was valued at $475,000, his investments in stocks and bonds were valued at $1,890,000, and his pension funds were worth $630,000 (Samuel was named beneficiary). Santiago also owned a life insurance policy that paid proceeds of $720,000 to Samuel. He left $60,000 to his church and $25,000 to his high school to start a scholarship fund in his wife's name. The rest of the estate was left to Samuel. Funeral costs were $15,000. Debts were $90,000 and miscellaneous expenses were $25,000. Attorney and accounting fees came to $32,000. Use Worksheet 15.1 to guide your estate tax calculations as you complete these exercises.

1. Compute the value of Santiago's probate estate. $
2. Compute the value of Santiago's gross estate. $
3. Determine the total allowable deductions. Enter your answer as a positive value. $
4. Calculate the estate tax base taking into account the gifts given to Samuel and Luna (remember that the annual exclusions "adjust" the taxable gifts). $
5. Use Exhibit 15.8 to determine the tentative tax on estate tax base. $
6. Subtract the appropriate unified tax credit (Exhibit 15.7) for 2018 from the tentative tax on estate tax base to arrive at the federal estate tax due. $