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than $212,000 to maintain Ripplestone and estimated that it would
have expenses of $150,000 to sell Ripplestone. Respondent
challenged these deductions after respondent issued the notice of
deficiency. These issues are new matter for which respondent
bears the burden of proof. Rule 142(a).
Petitioners seek to deduct more than the $362,000 the estate
deducted on its return. Petitioners bear the burden of proof
with respect to Ripplestone expenses in excess of $362,000.
However, we do not rely on the burden of proof to decide this
case.
C. Contentions of the Parties
We first consider whether petitioners satisfy the
requirements in the estate tax regulations. Expenses incurred
after March 16, 1990, to maintain and sell Ripplestone must be
necessary to the administration of the estate for the estate to
deduct them under Federal law. Petitioners contend that the
estate may deduct those expenses under section 20.2053-3, Estate
Tax Regs., because the executor and trustee needed to maintain
Ripplestone after March 16, 1990, and then to sell it to pay
taxes required as a result of decedent's exercise of her power of
appointment in her will. Petitioners contend that the estate did
not distribute Ripplestone to Trust C when decedent died because
petitioners believed that the estate could be liable for
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