Estate of Lewis S. Thompson, III, Deceased, Synovus Trust Company, Successor Executor To Security Bank and Trust Company - Page 1

                                 T.C. Memo. 1998-325                                  

                               UNITED STATES TAX COURT                                

                     ESTATE OF LEWIS S. THOMPSON, III, DECEASED,                      
                    SYNOVUS TRUST COMPANY, SUCCESSOR EXECUTOR TO                      
                    SECURITY BANK AND TRUST COMPANY, Petitioner v.                    
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 14929-96.               Filed September 16, 1998.           

                    D died testate on Feb. 19, 1992.  At the time of                  
               his death, D owned a 3,489-acre parcel of real property                
               (CMP), which was used to produce merchantable timber                   
               and crops and as a hunting preserve.  P borrowed funds                 
               from D's insurance trust for purposes of paying Federal                
               and State estate taxes and for the maintenance of CMP                  
               pending the resolution of this dispute.                                
                    On a timely filed Federal estate tax return, P                    
               reported the value of CMP at its fair market value                     
               (FMV).  P also made a valid protective election for                    
               special use valuation of CMP under sec. 2032A, I.R.C.                  
               In addition, P deducted the interest incurred on the                   
               borrowed funds from the value of D's gross estate as an                
               administrative expense under sec. 2053(a)(2), I.R.C.                   
                    On a timely filed amended estate tax return, P                    
               claimed that it is entitled to a refund for overpayment                

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