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See Estate of Todd v. Commissioner, 57 T.C. 288, 294-296 (1971).
Decedent's estate bears the burden of proof on this issue. Rule
142(a); Welch v. Helvering, 290 U.S. 111 (1933).
Tenn. Code Ann. sec. 35-50-109 (rep. vol. 1984) allows a
testator to incorporate by reference in her will the provision of
Tenn. Code Ann. sec. 35-50-110. Paragraph 3.1 of decedent’s will
incorporated Tenn. Code Ann. sec. 35-50-110, which provides in
part:
Without diminution or restriction of the powers vested
in the fiduciary by law, or elsewhere in this
instrument, and subject to all other provision of this
instrument, the fiduciary, without the necessity of
procuring any judicial authorization therefor, or
approval thereof, shall be vested with, and in the
application of such fiduciary’s best judgment and
discretion in behalf of the beneficiaries of this
instrument shall be authorized to exercise, the powers
hereunder specifically enumerated:
* * * * * * * *
(8) In behalf of the estate, borrow money;
evidence such loans by promissory notes or other
evidence of indebtedness signed by the fiduciary in the
fiduciary’s fiduciary capacity, to be binding upon the
assets of the estate but not upon the fiduciary in the
fiduciary’s individual capacity; secure such loans by
assigning or pledging personal property of the estate,
* * * and repay such loans, including principal and
interest due thereon.
In Cleveland Bank & Trust Co. v. Olsen, 682 S.W.2d 200 (Tenn.
1984), the Supreme Court of Tennessee faced a situation similar
to the one herein involving the deductibility, for Tennessee
inheritance tax purposes, of interest expenses incurred by an
estate which borrowed funds to pay taxes and other expenses. The
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