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On June 12, 1996, and December 30, 1997, fourth and fifth
extensions were requested and granted until January 31, 1997, and
December 30, 1998, respectively. All five extensions were
granted pursuant to respondent’s discretionary authority under
section 6161(a). On December 3, 1998, respondent served Stewart
Title Co. a notice of lien for the estate’s tax liability with
respect to the shopping center properties. On December 31, 1998,
the balance of the outstanding estate tax liability was paid with
the proceeds of a loan secured on a parcel of the shopping center
property. The loan was for 20 years with 7-percent interest and
a $26,361 monthly payment. The borrowers were the personal
family trusts of the beneficiaries. The borrowers may prepay the
loan after the third year, and the lender has the option to
accelerate the outstanding balance after 10 years if certain
conditions exist at that time. The term of the loan will end
December 30, 2018. We assume that to the extent the estate is
paying the interest on the loan, such payment is on behalf of or
to reimburse the beneficiaries’ family trusts.
Discussion
The threshold question underlying the parties’ controversy
is whether, under the circumstances of this case, the interest on
debt obtained to pay estate tax is an expense of administration
of the estate within the meaning of section 2053(a). The parties
interpret the existing case law as favoring their respective
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