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positions. Petitioner’s argument is that the circumstances of
this case should logically be allowed as a natural extension of
the existing precedent. Respondent’s argument is that the
interest being paid here is not being incurred in the
administration of the estate and, in addition, that petitioner
has not shown that it is allowable under local law.
The parties agree that the interest here is an otherwise
nondeductible personal obligation that could not have been
claimed by the trustee/beneficiaries or their respective family
trusts, which obtained the loan. Both parties also agree that,
under appropriate circumstances, an otherwise nondeductible
interest expense may be deductible as an administration expense
in an estate tax setting. Finally, respondent also agrees that
“an estate may [,under certain circumstances,] borrow money from
a private lender to satisfy its Federal estate tax liability and
deduct the interest on the debt as an administration expense
under section 2053”. Accordingly, we consider whether the
interest paid is deductible under section 2053. If we decide
that the interest is deductible, then we must decide whether it
would be appropriate to permit this proceeding to be stayed for
as long as 20 years to permit the payment and deduction of the
interest before entry of a decision.
To be deductible under section 2053, expenditures must be
actually and necessarily incurred in the administration of the
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