- 16 - operate to restrict the remedies available to a lender. Id. The taxpayer argued that since the value of the residence exceeded the amount of the debt, the estate would not be liable for the encumbrances under the one action rule. Id. The Commissioner, on the other hand, contended “that the estate is at least potentially liable on the encumbrances, and therefore, the full value of decedent’s interest in the residence is includable in the gross estate”. Id. We held for the Commissioner. Id. Given the foregoing, we are unable to agree with the estate that decedent’s express legal liability on his own interest in the disputed property may be disregarded in applying section 20.2053-7, Estate Tax Regs. Both the subject promissory note and State law afforded the lender a choice of remedies, one of which included the imposition of personal liability. Yet the estate asks us to eliminate one of those alternatives on mere generalities and assumptions regarding creditor preference. We decline to do so. We hold that the full value of decedent’s interest in the Monte Vista property must be included as part of his gross estate, with a corresponding deduction allowed to the extent permitted by the Internal Revenue Code. III. Extent of Entitlement to Marital Deduction Section 2056(a) authorizes a deduction from the gross estate of “an amount equal to the value of any interest in property which passes or has passed from the decedent to his survivingPage: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Next
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