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Eleventh Circuit, have recognized the validity of this regulation
as imposing a Federal standard of necessity over and above the
State requirement of allowability. See Marcus v. Dewitt, 704
F.2d 1227, 1229-1230 (11th Cir. 1983) (citing Pitner v. United
States, 388 F.2d 651, 659 (5th Cir. 1967)); Estate of Posen v.
Commissioner, 75 T.C. 355, 366 (1980).
The regulations consider the application of the phrase
"actual and necessary expenses" to particular types of
administration expenses. Expenses of preserving and distributing
estate property are classified as miscellaneous expenses by
section 20.2053-3(d)(2), Estate Tax Regs., which provides:
“Expenses for selling property of the estate are deductible if
the sale is necessary in order to pay the decedent's debts,
expenses of administration, or taxes, to preserve the estate, or
to effect distribution.” See Marcus v. Dewitt, supra at 1229;
Estate of Posen v. Commissioner, supra at 366-367, approving and
applying the above regulation.
Respondent argues that the expenses of operation of the
cattle ranch are not allowable as administration expenses under
Florida law. The Circuit Court of Highlands County has not ruled
whether the expenses are allowable under Florida law. Because
Fishbranch and the assets of the cattle ranch were trust assets,
not probate assets, the Circuit Court, in its capacity as a
probate court, will probably never be asked to pass on their
allowability under Florida law. Respondent acknowledges that
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