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taken from other assets in the residuary estate, of which these
bequests to the grandchildren do not form a part.
2. The Option of Where To Take the Deduction
The second issue to be decided is whether the language of
the will requires that an amount equal to the administration
expenses be subtracted in arriving at the residuary estate,
regardless whether such administration expenses are paid from
estate income or corpus.
The first sentence of item III provides that the residuary
estate is the amount of estate remaining after bequests, i.e.,
the rest and residue, less deductions allowed under sections 2053
and 2054. Respondent asserts that this language requires that
any expenses allowed under sections 2053 and 2054 be deducted
from the gross estate to determine the residuary estate.
Petitioner argues that section 2053 (there being no section 2054
expenses) does not "allow" deductions. That section merely
specifies those classes of deductions which are "allowable". The
Commissioner "allows" these deductions upon examination and
approval of the estate tax return, Form 706. Since certain
administration expenses were claimed on Form 1041, U.S. Fiduciary
Income Tax Return, of the estate, pursuant to section 642(g),
they were not claimed or "allowed" for estate tax purposes.
We agree with petitioner. Item X of decedent's will,
"Provisions Relating to the Executor", provides:
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