- 66 -
the mortgage is not included in the gross estate, the mortgage is
not deductible under section 2053(a)(4). See Estate of Courtney
v. Commissioner, 62 T.C. 317, 323-324 (1974).
It is not entirely clear how section 2053(a)(4) should be
applied when only a part of the security for a mortgage is
included in a decedent's gross estate. We have held, however,
that the deduction may in no event exceed the amount of the
security included in the estate. See Estate of Fawcett v.
Commissioner, 64 T.C. 889, 897 (1975).
According to petitioner, decedent's estate included some of
the land subject to the Land Bank mortgage, with a fair market
value at decedent's death of $101,451. Because the original
principal amount of the Land Bank loan was $950,000, petitioner
asserts the land included in decedent's estate represented 10.68
percent (i.e., $101,451 divided by $950,000) of the security for
the loan. As a result, petitioner also asserts it is entitled to
a section 2053(a)(4) deduction in an amount equal to 10.68
percent of the $825,068 balance outstanding at decedent's death,
or $88,109.18
18 In performing these calculations, petitioner apparently
assumed that the value, at decedent's death, of all the security
for the Land Bank loan was equal to the $950,000 original
principal amount of the loan. The record, however, contains no
evidence of the value of the land securing the loan that was not
included in decedent's estate.
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