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litigation is not essential to the proper settlement of the
estate. See sec. 20.2053-3(c)(3), Estate Tax Regs.
California law allows the personal representative to employ
tax experts in negotiations or litigation that may be necessary
for the final determination and payment of taxes and to pay the
experts from the funds of the estate.25 The litigation
undertaken by petitioner in this case was in response to
respondent's determination of a deficiency in petitioner's
Federal estate tax. The litigation did not relate to the
respective interests of the heirs, nor was it incurred for their
individual benefit. Accordingly, we conclude that the
administrative expenses petitioner claims are of the type that
are allowable under California law and the regulations.
Respondent's regulations provide that a deduction for
attorney's fees incurred in contesting an asserted deficiency or
25California law provides:
The personal representative may also employ or retain
tax counsel, tax auditors, accountants, or other tax
experts for the performance of any action which such
persons, respectively, may lawfully perform in the
computation, reporting, or making of tax returns, or in
negotiations or litigation which may be necessary for
the final determination and payment of taxes, and pay
from the funds of the estate for such services. [Cal.
Prob. Code Ann. sec. 10801(b) (West 1998).]
These amounts are in addition to the compensation allowed
under Sec. 10800 for all ordinary services of the personal
representative. See Cal. Prob. Code Ann. sec. 10801(a) (West
1998).
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