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decision that the value of the realty was depressed, and it was
not a good time to liquidate. Instead, the realty was
distributed to the beneficiaries, and they placed the property
into their own family trusts. Thereafter, the beneficiaries
continued to believe that market conditions were not right, and
so they borrowed (through their family trusts) the money to pay
the QTIP’s share of the estate’s tax burden.4 Respondent had
filed a notice of his lien in 1998, and the lien was satisfied
from the proceeds of the beneficiaries’ family trusts’ loan at
the loan settlement/closing. After the payment of the
outstanding estate tax liability, there remained no disputes
concerning the estate tax liability that had been reported on the
estate’s return. Likewise, at that juncture, there remained no
assets in the estate to administer on behalf of or to distribute
to the estate's beneficiaries. Under these facts, it is
difficult to see how the estate could meet the requirement of
section 2053 and the underlying regulations.
Although we have found that petitioner has not shown that
the interest on the loan meets the statutory requirements, we
4 We note that it is within respondent’s discretion, as
provided by Congress in sec. 6161, to extend the period for
payment of the tax for up to 10 years. In that regard, under the
circumstances of this case, respondent was not unreasonable in
the exercise of his discretion. Respondent granted five
extensions, and the payment of the tax was delayed for about 5
years, which seems to be a sufficient time to raise the funds to
pay an agreed tax obligation.
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