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boxes, the unreported assets consist mainly of gems, jewelry,
furniture, and a music collection.
4. Other Items
a. The $115,266 Shortfall
Respondent increased the decedent's adjusted taxable gifts
by $115,266 to reflect a post-death gift made to Ms. Trompeter in
connection with the $3,077,100 payment to CFTB. Ms. Trompeter
was obligated to indemnify Sterling for half of the amount paid
to CFTB, but, because her subaccount had only $1,423,772 in cash
when the payment was due, the coexecutors authorized the escrow
agent to pay the $115,266 shortage from the decedent's
subaccount. Respondent determined that the estate's payment of
the shortage, coupled with the later "offset" of the $115,266 in
connection with the "settlement" of Ms. Trompeter's claim, was an
adjusted taxable gift made by the coexecutors on behalf of the
estate.
We disagree with respondent's determination. Although
respondent is correct that Ms. Trompeter became liable to the
estate for $115,266 when its assets were used to pay a portion of
her obligation, and that she never repaid this amount to the
estate, these facts standing alone do not mean that the estate
made a $115,266 gift to her. The value of the loaned funds was
included in the decedent's gross estate. Thus, no further
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