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petitioner did not obtain. In addition, respondent argues that
the interest expense at issue was not "necessarily" incurred
within the meaning of section 20.2053-3, Estate Tax Regs.
We first look to Georgia law to determine whether the
interest expense claimed by petitioner as an administration
expense is properly deductible thereunder. See Estate of Todd v.
Commissioner, supra at 294-296; McKee v. Commissioner, supra.
Former Georgia Code section 53-7-7, applicable to decedents
dying before January 1, 1998, provides in pertinent part as
follows:
(a) An executor * * * shall have the legal right
to borrow money * * * for the purpose of paying any
gift, estate, inheritance, income, sales, or ad valorem
taxes due the United States * * * [or] state * * *.
(b) An executor * * * desiring to borrow money
shall petition the judge of the probate court, setting
forth the facts, and shall specify in his petition the
amount of money to be borrowed, the purpose for which
the same shall be used, the rate of interest to be
paid, the property to be pledged as security, and the
period of time over which the money is to be repaid.
* * * After a hearing, if the judge is satisfied of
the truth of the allegations in the petition and deems
it in the best interest of the estate, an order shall
be passed granting leave to borrow money and encumber
the estate or any part thereof, specifying the portion
of the estate to be bound as definitely as possible.
The order by the judge granting permission * * * to
borrow shall be binding, final, and conclusive * * *
provided, however, that nothing in this Code section
shall prevent any party at interest from entering an
appeal from the order within the time provided by law;
and provided further that nothing in this Code section
shall limit the powers contained in the will of a
decedent. [Emphasis added.]
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