Estate of Howard Gilman, Deceased, Bernard D. Bergreen and Natalie Moody, Executors - Page 16

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          the estate’s principal assets to the foundation in the                      
          restructuring; (d) the estate should have retained enough assets            
          to sell to pay its expenses; (e) the executors had elected to pay           
          the estate tax in 10 annual installments; and (f) the executors             
          could have demanded that the foundation return some of the                  
          proceeds from HG’s sale of assets transferred from the estate.              
          The estate disputes respondent’s contentions.                               
               An estate may deduct administration expenses allowable under           
          the probate law of the jurisdiction where the estate is being               
          administered, sec. 2053(a)(2), and which are actually and                   
          necessarily incurred in administering a decedent’s estate, Estate           
          of Grant v. Commissioner, 294 F.3d 352, 353 (2d Cir. 2002), affg.           
          T.C. Memo. 1999-396; sec. 20.2053-3(a), Estate Tax Regs.9                   
               Interest on funds borrowed to pay taxes or other debts of              
          the estate while the estate is illiquid (i.e., while the estate             

               9 Sec. 20.2053-3(a), Estate Tax Regs., provides in part:               
                    The amounts deductible from a decedent’s gross                    
               estate as “administration expenses” * * * are limited                  
               to such expenses as are actually and necessarily                       
               incurred in the administration of the decedent's                       
               estate; that is, in the collection of assets, payment                  
               of debts, and distribution of property to the persons                  
               entitled to it.  The expenses contemplated in the law                  
               are such only as attend the settlement of an estate and                
               the transfer of the property of the estate to                          
               individual beneficiaries or to a trustee * * *.                        
               Expenditures not essential to the proper settlement of                 
               the estate, but incurred for the individual benefit of                 
               the heirs, legatees, or devisees, may not be taken as                  

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