- 17 -
has not shown entitlement to the interest deduction under section
2053. Accordingly, respondent’s argument is well taken.
In the same vein, the parties each relied on Estate of Todd
v. Commissioner, 57 T.C. 288 (1971), and Estate of Huntington v.
Commissioner, 36 B.T.A. 698 (1937). Those cases involved
situations where estates were permitted to deduct the interest on
borrowing to pay the estate tax. Respondent agrees that under
certain circumstances an estate is entitled to deduct interest on
a loan used to pay estate tax. Respondent, however, points out
that it was the estate that borrowed in those cases and that
petitioner has not shown entitlement to a section 2053 deduction.
Respondent further points out that in Estate of Huntington, the
Board referenced the fact that the loan transactions were
sanctioned by the California State probate court, which found the
loans to be for the benefit of the estate. We observe that in
Estate of Huntington the Board also noted that at all times the
individuals who incurred the related expenses were acting in
their capacity as executors.
In Estate of Todd v. Commissioner, supra, the Court noted
that Texas law granted the estate fiduciary authority to borrow
funds for payment of Federal estate and State inheritance taxes.
See id. at 294. The Court, in Estate of Todd, also found it
important that because the estate did not have any liquid assets,
the estate borrowed to pay its estate tax. In sum, these cases
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011