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largely of illiquid assets. If the loans had not been obtained,
the estate would have been required to sell its assets on
unfavorable terms to raise funds for the payment of death taxes.
In Estate of Todd, we held that the estate could deduct interest
on the loans and noted that Texas law specifically authorized an
executor to borrow funds on behalf of an estate.
Decedent's estate also relies on Rev. Rul. 84-75, 1984-1
C.B. 193, to support its position that the interest expenses
incurred on the loans were actually and necessarily incurred
administration expenses that are deductible under section 2053.
In this ruling, the estate consisted almost entirely of closely
held stock, but the executor did not make the election to defer
taxes under section 6166. Instead, the estate borrowed funds
from a private source to pay the Federal estate tax obligations.
The ruling states that interest on the private loan was
deductible because the loan was obtained to avoid a forced sale
of assets. This ruling, although it lacks the force of
precedent, recognizes that there are circumstances in which an
executor may reasonably choose to obtain a private loan on behalf
of an estate, even though the estate could qualify for section
6166 deferral.
In Estate of Sturgis v. Commissioner, T.C. Memo. 1987-415,
the personal representatives of an estate obtained a $2,669,616
loan from private sources to pay State and Federal death and
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