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submitted a formal loan application, and we can infer none was
made. See Helvering v. Natl. Grocery Co., 304 U.S. 282, 294
(1938) (“To draw inferences, to weigh the evidence and to declare
the result is the function of the * * * [U.S. Tax Court].”); see
also Wichita Terminal Elevator Co. v. Commissioner, 162 F.2d 513,
515 (10th Cir. 1947), affg. 6 T.C. 1158 (1946). We find both
inquiries inadequate to prove ordinary business care and
prudence. Both requests were informal and both involved only a
single property as collateral.
The estate also made no effort to sell or borrow against the
estate’s mineral interests or its portfolio of stocks and bonds.
Respondent argues this is an additional indicium that the estate
failed to exercise ordinary business care and prudence in
attempting to pay its Federal estate tax. We agree.
VII. The Estate’s Preferential State Estate Tax Payments
The estate made a number of State estate tax payments in
preference to paying its Federal estate tax. Respondent contends
that this further shows a lack of reasonable cause for failing to
11(...continued)
the Federal estate tax is further evidence that the estate failed
to show ordinary business care and prudence in paying its tax
obligation. While there is some authority for holding an
executor personally liable for the estate tax, the weight of
authority seems to hold an executor liable only for a fiduciary
breach. See Schwartz v. Commissioner, 560 F.2d 311 (8th Cir.
1977), revg. and remanding T.C. Memo. 1975-267; Leigh v.
Commissioner, 72 T.C. 1105 (1979). But see Baldwin v.
Commissioner, 94 F.2d 355 (9th Cir. 1938). There is a strong
argument that the executor has breached his fiduciary duties
here, but that question is not before the Court.
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