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tax liabilities could have been paid. In that connection,
respondent maintains that the executor resorted to borrowing
funds from the Trust rather than selling such assets (which
included such publicly traded stocks as Synovus, Exxon, and
Amoco), in order for decedent's heirs to reap the benefit of
anticipated appreciation of the stocks. In effect, respondent
argues that the interest expenditure was incurred for the benefit
of decedent's heirs, rather than the estate, in contravention of
section 20.2053-3(a), Estate Tax Regs.
We are convinced that the financial position of the estate
at the time of the borrowing was insufficient to make the
required tax payments and provide for the maintenance of Cane
Mill until such time as the asset could be distributed to
decedent's heirs. Cf. Estate of Street v. Commissioner, T.C.
Memo. 1994-568. In that connection, William O. Dorough, Jr., a
senior vice president of Synovus and the individual responsible
for the administration of decedent's estate from the date of
decedent's death, testified credibly that a shortfall of
approximately $600,000 existed between estate tax liabilities and
liquid assets (the publicly traded stocks) available to pay them.
Contrary to respondent's assertion, the $400,740 in life
insurance proceeds includable in the gross estate was not
available to the estate for purposes of paying its estate tax
liability, inasmuch as Item Seven of decedent's will provides
that all estate taxes shall be paid out of the residuary, and
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