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We also do not think that the interest expense was
unnecessary because the administration of the estate has been
unduly prolonged. Sec. 20.2053-3(d), Estate Tax Regs. Contrary
to respondent's argument, the facts here differ from those in
Hibernia Bank v. United States, 581 F.2d 741 (9th Cir. 1978). In
Hibernia Bank, the court held that the estate's interest payments
were unnecessary inasmuch as the estate's administration had been
unduly prolonged. In that case, all the specific bequests and
claims had been paid out of the estate by December 1967. Only
two main estate assets remained: a mansion and 10,000 shares of
the executor's stock. Rather than distribute the remaining
assets, the executor attempted to sell the mansion, a feat not
accomplished until 1972. (The mansion was sold because the heirs
preferred a cash distribution to certain residuary trusts rather
than a distribution of undivided interests in the mansion.)
Rather than sell the stock, the executor borrowed funds for the
upkeep of the mansion until it was sold. There were, apparently,
no affairs to be wound up or reason for the estate to remain
open, other than the sale of the mansion. In contrast, in the
case before us, there is at least the matter of the estate's
eligibility for special use valuation of the subject property
which requires that the estate remain open. Cf. Estate of
Sturgis v. Commissioner, supra.
On the basis of the above discussion, we hold that
petitioner is entitled to deduct interest incurred on funds
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