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In Coffee v. Ruffin, 44 Tenn. 487 (1867), the
executor was granted broad powers under the will.
During the administration of the will, the executor
borrowed money at usurious rates of interest to prevent
a sacrificial sale of the real estate. The court
credited the executor for the usurious interest paid,
noting the broad discretion conferred upon the executor
by the will to borrow money, even at usurious rates,
and to charge the estate with that interest. In Allen
v. Shanks, 90 Tenn. 359, 16 S.W. 715 (1891), the
executor borrowed money without express authorization.
Because the money was used to benefit the estate,
however, the court credited the executor for legal
interest paid on the loan, but it refused to credit the
usurious percentage of the interest.
As the Coffee and Ruffin [sic Allen] courts
credited interest as a cost of administration under
those circumstances, likewise, interest should be a
proper expense of administration when specifically
authorized by the terms of the will, as in the present
case. Interest is simply the cost of using money, and
there should be no differentiation for purposes of
deductibility whether the interest is paid on taxes or
on money borrowed to pay the taxes. Estate of Bahr v.
Commissioner, 68 T.C. 74 (1974); * * * [Id. at 202;
emphasis added.]
Under Tennessee law, the incorporation in a will of the
statutory power set forth in Tenn. Code Ann. sec. 35-50-110(8)
authorizes an executor to borrow funds and provides that a
Tennessee court will credit an executor for interest necessarily
and properly incurred on loans. Decedent incorporated by
reference the provisions contained in Tenn. Code Ann. sec. 35-50-
110 into her will.
Respondent would distinguish Cleveland Bank and Trust Co. v.
Olsen, supra, on the grounds that in that case the incorporation
of the statutory power to borrow was not restricted by limiting
language in the will. In the instant case, the incorporation of
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