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3. Selling Ripplestone Benefited the Trust C Beneficiaries
We believe that a principal reason for selling Ripplestone
was not to pay taxes owed by decedent's estate, but to
accommodate the 28 beneficiaries of Trust C. Ripplestone could
not readily be divided for distribution to 28 beneficiaries. As
we said in our original opinion, the desire to accommodate those
28 beneficiaries would not make the costs of maintaining and
selling Ripplestone deductible by decedent's estate.
E. Conclusion
An estate may deduct expenses that are necessarily incurred.
Sec. 20.2053-3(a), Estate Tax Regs. Trust B had enough liquid
assets, such as income it had received, to pay any potential
taxes. It was not necessary for Trust B to hold Ripplestone
after March 16, 1990, and later sell it. Thus, the expenses of
maintaining and selling Ripplestone after March 16, 1990, are not
deductible as administration expenses under section 2053(a)
and section 20.2053-3(a) and (d)(2), Estate Tax Regs.9
To reflect the foregoing,
Decision will be entered
under Rule 155.
9 As a result of this conclusion, under the two-part test
established by the U.S. Court of Appeals for the Sixth Circuit in
Estate of Millikin v. Commissioner, 125 F.3d 339 (6th Cir. 1997)
(en banc), vacating 106 F.3d 1263 (6th Cir. 1997) and revg. and
remanding T.C. Memo. 1995-288, we need not decide whether the
expenses to keep and sell Ripplestone after Mar. 16, 1990, were
necessary administration expenses under Ohio law.
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