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interest on a loan to an estate to pay estate tax. As we have
explained, the fundamental question we must answer here is
whether, under the circumstances of this case, the estate is
entitled to deduct the interest expense pursuant to section 2053.
We conclude and hold that petitioner has not shown, within the
meaning of section 2053 and the underlying regulations, that it
is entitled to deduct the interest expense in question.
First, the case precedent petitioner relies on in support of
its interest deduction involved circumstances where the expense
(interest) was incurred during the administration of the estate
and before the resolution of the tax controversy.3 Petitioner
seeks to keep this case open for up to 20 years after the parties
have resolved all controversies that were initially placed in
issue. Second, after several extensions of time, the QTIP trust,
in 1995, transferred the shopping center property to the
beneficiaries who, in turn, transferred the property to their
family trusts, of which they were the trustees. In this regard,
petitioner’s contentions that the QTIP trust did not unreasonably
delay are irrelevant.
The QTIP trust was obligated to pay its share of the Federal
estate tax over to the estate and failed to do so because the
QTIP trustee (who was also a beneficiary of the estate) made the
3 A more complete discussion of the cases appears later in
this opinion.
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