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not decided the value of the services performed by Mr. McReady in
managing the Bradley rental property. On this record, his
services would likely be difficult to value, but if those
services should be included in the numerator of the formula for
exclusion, it is clear that additional value would be added to
the numerator of the exclusionary equation because of his
performance over 9 years. Because the estate has shown
sufficient consideration to warrant the exclusion of one-half of
the fair market value of Western (the amount claimed by the
estate), we need not address the value of Mr. McReady’s services
in managing Bradley.
B. Is the Estate Entitled To Deduct the $10,070 Mortgage
Settlement Fees From the Gross Estate?
The estate claimed a $10,070 mortgage settlement fee as an
administrative expense. The $10,070 was incurred in the
refinancing/mortgaging of the Bradley rental property in order to
take value from that asset to pay the estate’s debts.
Generally, administrative expenses are deductible from the
gross estate in computing the taxable estate. Sec. 2053(a)(2).
More specifically, deductible administrative expenses must be
actually and necessarily incurred in the administration of the
estate, which includes the payment of debts and distribution of
the property to persons entitled to it. Sec. 20.2053-3(a),
Estate Tax Regs. Expenditures incurred for the individual
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