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7-601(b) would have been $1,012.77 ($11,253 x 9%), and not
$32,237 as claimed by the estate.9
We also reject the estate’s position that “Meeting the tests
for allowability by local law, it [the amount of executors’ fees
claimed by the estate] is also allowable by federal law.” In
determining the deductibility of administration expenses under
section 2053(a)(2), the deductions claimed must be allowable not
only by the State law under which the estate is administered but
also by Federal law. See Estate of Love v. Commissioner, 923
F.2d 335, 337 (4th Cir. 1991), affg. T.C. Memo. 1989-470; Estate
of Smith v. Commissioner, 510 F.2d 479, 482-483 (2d Cir. 1975),
affg. 57 T.C. 650 (1972); Estate of Posen v. Commissioner, 75
T.C. 355, 367 (1980). To satisfy Federal law, the deductions
claimed as administration expenses must satisfy the requirements
of section 2053 and the regulations thereunder.
9Respondent concedes that the estate is entitled to deduct
executors’ fees determined under Md. Code Ann., Est. & Trusts,
sec. 7-601(b). However, respondent made a mathematical error in
determining the value of decedent’s non-Trust property and,
consequently, made an error in calculating the maximum amount of
executors’ fees allowable under Md. Code Ann., Est. & Trusts,
sec. 7-601(b). Respondent calculated the value of decedent’s
non-Trust property to be $10,997 and the maximum compensation of
a personal representative under Md. Code Ann., Est. & Trusts,
sec. 7-601(b) to be $990 ($10,997 x 9%). In fact, the value of
decedent’s non-Trust property was $11,253, consisting of $256 in
cash and traveler’s checks, life insurance valued at $1,025,
$7,228 in a jointly owned money market mutual fund, and $2,744 of
other miscellaneous property.
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