Estate of Martin J. Machat, Deceased, Avril Giacobbi and Eric R. Sklar, Executors - Page 5

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            1990 and 1991 tax returns, which reported income derived from the                           
            pension funds only to the extent that the assets formerly held in                           
            the Plan and Trust were used for the estate's expenses ($295,447                            
            and $367,460 in 1990 and 1991, respectively).  The pension funds                            
            were used to pay the estate's tax liabilities and other                                     
            administration expenses including attorney's fees, temporary                                
            administrator's fees, apartment rental and maintenance fees, real                           
            estate taxes, and storage fees.  Some of the expenses paid from                             
            the pension funds were made with the surrogate's court approval,                            
            while others were made without the surrogate's court approval.                              
                  In December 1994, after 5 days of trial, the New York County                          
            Surrogate's Court's Preminger issued an order directing that                                
            decedent's will be admitted to probate on January 5, 1995.  On                              
            March 30, 1995, Ms. Giacobbi filed papers in the probate court of                           
            Greenwich, Connecticut, seeking to have decedent's will admitted                            
            to probate.  The will was accepted by the probate court, and                                
            Ms. Giacobbi and Mr. Sklar were appointed coexecutors on or about                           
            March 30, 1995.  The pension funds, along with decedent's other                             
            assets, are the subject of continuing litigation.                                           
                  In separate notices of deficiency issued to each of the                               
            coexecutors, dated August 14, 1996, respondent determined that                              
            the 1988 and 1989 pension distributions were includable in the                              
            estate's income when received, and not when expended, by the                                
            temporary administrator.                                                                    





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