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was the sole owner of the stock of Advance Leasing from 1996
until she died in 1999. After Bob Hughes died, Dean McBride
(McBride) became the sole officer and director of Advance
Leasing. Decedent issued a durable power of attorney to McBride
in 1996.
In 1997, McBride executed an agreement and a promissory note
on behalf of decedent and Advance Leasing which stated that
decedent promised to pay $400,000 to Advance Leasing on demand in
exchange for 4,000 shares of Advance Leasing’s common stock.
Advance Leasing issued a stock certificate to decedent for the
4,000 shares. McBride paid the $400,000 to Advance Leasing after
decedent died in 1999.
The issues for decision are:
1. Whether $400,000 is deductible under section
2053(a)(3)1 as a claim against decedent’s gross estate based on
the $400,000 promissory note. We hold that it is not.
2. Whether interest of $21,782 owed to decedent by Advance
Leasing on certain promissory notes when decedent died is
included in decedent’s gross estate. We hold that it is not.
1 Section references are to the Internal Revenue Code as in
effect as of the date of decedent’s death, unless stated
otherwise. Rule references are to the Tax Court Rules of
Practice and Procedure.
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