- 25 -
that no claim "shall be made against any life insurance
beneficiary for payment of any part of such [estate] taxes." See
Estate of Papson v. Commissioner, 73 T.C. 290, 297 n.7 (1979).
Even if the life insurance proceeds were available, a gap of
almost $200,000 remained between liquid assets and estate tax
liabilities.
Although respondent has suggested that the executor could
have clearcut merchantable Cane Mill timber to make up the
difference, Dorough testified that this fairly drastic measure
would not have supplied the estate with the necessary amount of
funds, and he did not consider this course of action advisable.
In addition to its estate tax liabilities, Dorough testified
that the estate had other obligations, including liability for
property taxes, the salaries of two regular employees, and the
wages of occasional laborers, all of which required the retention
of a certain amount of liquidity pending the resolution of the
instant dispute, inasmuch as the estate itself did not generate
sufficient income to maintain the Cane Mill operations.
This Court stated in Estate of Sturgis v. Commissioner, T.C.
Memo. 1987-415 that "we are not prepared to second guess the
judgments of a fiduciary not shown to have acted other than in
the best interests of the estate." The same sentiment holds sway
in the instant case; the regulations under section 2053 do not
require that an estate totally deplete its liquid assets before
an interest expense can be considered necessary.
Page: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NextLast modified: May 25, 2011