UNITED STATES TAX COURT

T.C. Memo. 1999-396

UNITED STATES TAX COURT

ESTATE OF CONSTANCE R. GRANT, DECEASED, P. WALKER

GRANT, JR., PERSONAL REPRESENTATIVE, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 3818-98.

Filed December 7, 1999.

P. Walker Grant, Jr. (personal representative), for petitioner.

Elise F. Alair and Bradford A. Johnson, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

CHIECHI, Judge:

Respondent determined a deficiency of

$15,248 in Federal estate tax (estate tax) with respect to the

estate of Constance R. Grant (the estate).

The issue remaining

for decision is whether the estate is entitled to deduct certain

- 2 amounts claimed under section 2053.1

We hold that it is to the

extent stated herein.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found.

At the time the petition was filed, P. Walker Grant, Jr.

(Mr. Grant), the son of decedent and a personal representative of

the estate, resided in Shelburne, Vermont.2

On October 1, 1991, Ms. Grant, who was residing and domiciled in Montgomery County, Maryland, executed a declaration of

trust (declaration of trust) under which she placed most of her

real and personal property into a revocable trust known as the

“CONSTANCE R. GRANT REVOCABLE TRUST” (Trust).

The declaration of

trust provided in pertinent part:

2. Trust Estate. I hereby transfer, assign,

convey and quit claim unto myself, as Trustee, and unto

my successors in trust all of the property enumerated

in Schedule A hereto attached, to have and to hold such

property, and any other property which may be added to

the Trust Estate pursuant to the provisions hereof, all

of which property is hereinafter collectively referred

to as the “Trust Estate”.

1

Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect on the date of the death of

Constance R. Grant (decedent or Ms. Grant). All Rule references

are to the Tax Court Rules of Practice and Procedure.

2

Kathryn Lynn Grant Adams (Ms. Adams), the only other child

of decedent, also served as a personal representative of the

estate. The record does not disclose where Ms. Adams resided at

the time the petition was filed in this case.

- 3 3. Trust and Successor Trustee. So long as I am

alive and competent, I shall serve as Trustee of the

Trust Estate. In the event of the death or resignation

of the Donor [decedent] as Trustee, or if the Donor’s

personal physician certifies in writing to the Donor’s

children, PRESTON WALKER GRANT, JR. and KATHRYN LYNN

GRANT ADAMS, that, in his judgment, the Donor is physically or mentally unable to administer the Trust Estate, then PRESTON WALKER GRANT, JR., KATHRYN LYNN

GRANT ADAMS and DONALD R. WILSON, shall serve as Successor Trustees. If the Donor’s physician subsequently

certifies in writing to the Successor Trustees that the

donor has recovered and is currently mentally and

physically able to serve as Trustee, the appointment of

the Substitute Trustee shall terminate and the Donor

shall be restored as Trustee.

*

*

*

*

*

*

*

4. Revocation. I hereby reserve the right at any

time, and from time to time, during my lifetime, to

revoke the Trust Estate, in whole or in part, or to

change, alter, modify or amend any of the terms and

provisions hereof, and to withdraw all funds and other

property, in whole or in part, without the consent of

any other person.

*

*

*

*

*

*

*

7. Distribution of Income and Principal During My

Lifetime. During my lifetime, I shall have the power

to withdraw any part or all of the net income and

principal of the Trust. Any net income not withdrawn

shall be added to the principal.

*

*

*

*

*

*

*

8. Distribution on Death. Upon my death, the

“Net Assets” (as hereinafter defined) of the Trust

Estate shall be distributed by my Successor Trustee to

my children PRESTON WALKER GRANT, JR. and KATHRYN LYNN

ADAMS, in equal shares per stirpes, whereupon this

trust shall terminate.

(a) My Successor Trustees, in their sole

discretion, are authorized to distribute the Net Assets

of the Trust Estate to my children in kind or in cash,

- 4 or partly in each. If they elect to distribute wholly

or partly in cash, they are authorized, in their sole

discretion, to sell so much or all of the Net Assets of

the Trust Estate as they deems [sic] appropriate for

that purpose.

In distributing any tangible personal property of the Trust Estate to my children, I request my

Successor Trustee to distribute such property to my

children equally, but so far as practicable, in accordance with the preference of each child. In the event

of any disagreement as to the allocation of any item of

tangible personal property, the allocation shall be

made by the Successor Trustee other than PRESTON WALKER

GRANT, JR. and KATHRYN LYNN GRANT ADAMS (the “Independent Trustee”). * * *

(b) The term “Net Assets” shall mean the

gross assets of the Trust Estate less any taxes or

other expenses paid pursuant to the provisions of

Paragraph 11 hereof.

*

*

*

*

*

*

*

10. Powers Of Trustee. The Trustee and any

Successor Trustee hereunder shall have the fiduciary

powers enumerated in Section 15-102 of the Estates and

Trusts Article, Annotated Code of Maryland, as amended

from time to time, specifically including the right to

employ appropriate assistance in the administration of

the Trust, including accountants, attorneys and investment advisors.

In addition, the Trustee hereunder shall have

the power to invest in common trust funds and uninsured

money market funds; to invest and keep the Trust funds

invested in such stocks, common or preferred, bonds,

mortgages or other property as he/she may deem advisable or proper, without being restricted by any manner

whatsoever as to the character of any investment by any

statute, rule of law, or Court governing the investment

of trust funds. My Trustee is authorized to borrow

funds and pledge trust property without Court approval,

and to sell, lease, or otherwise convey any property of

the Trust Estate on such terms and conditions as my

Trustee may deem advisable, and to execute such deeds,

mortgages, leases or other instruments as may be neces-

- 5 sary or desirable to effectuate the encumbrance or

conveyance of any trust property.

*

*

*

*

*

*

*

12. Court Administration. It is my express

intention that the Trust hereby created shall not be

administered under the supervision of any Court. * * *

13. Maryland Law. This agreement has been executed by me in the State of Maryland, and all questions

relating to its validity, construction and administration shall be determined in accordance with the laws of

the State of Maryland.

14. Compensation of Independent Trustee. I

direct that DONALD R. WILSON or such other Independent

Trustee who serves as Successor Trustee hereunder,

shall receive a reasonable compensation from the Trust

Estate for his or her services.

On October 1, 1991, the same date on which Ms. Grant executed the declaration of trust, she executed a last will and

testament (decedent’s will).

Decedent’s will provided in perti-

nent part:

ITEM I

I direct my Personal Representatives, hereinafter

named, to pay the expenses of my last illness, funeral

and burial, in such amount as they may deem proper and

without regard to any limitation in the applicable

local law as to the amount of such expense.

ITEM II

All of the rest, residue and remainder of my

estate of whatsoever kind and wheresoever situate [sic]

I give, devise and bequeath absolutely in fee simple

unto my children, PRESTON WALKER GRANT, JR. and KATHRYN

LYNN GRANT ADAMS, in equal shares per stirpes.

In distributing any tangible property hereunder to

my children, such property shall be distributed

- 6 equally, but so far as practical, in accordance with

the preference of each child.

ITEM III

I grant unto my Personal Representative [sic] all

of the powers enumerated in the Estates and Trusts

Article, Title 7, Section 401, Annotated Code of Maryland relating to powers granted to Personal Representatives.

ITEM IV

I appoint my children, PRESTON WALKER GRANT, JR.

and KATHRYN LYNN GRANT ADAMS, as Personal Representatives. * * *

On April 2, 1994, Ms. Grant, who was still a resident and

domiciliary of Maryland, died.

After decedent’s death, Mr.

Grant, Ms. Adams, and Donald R. Wilson served as the successor

trustees of the Trust.

Only $11,253 of decedent’s gross estate passed to her

children Mr. Grant and Ms. Adams outside of the Trust (non-Trust

property).

The non-Trust property consisted of $256 in cash and

traveler’s checks; life insurance valued at $1,025; $7,228 in a

jointly owned money market mutual fund; and $2,744 of other

miscellaneous property.

The balance of decedent’s gross estate,

which had an aggregate value of $865,480, passed to her children

pursuant to paragraph 8 of the declaration of trust (nonprobate

property).

The nonprobate property consisted of, inter alia,

decedent’s residence located at 13730 Deakins Lane, Germantown,

Maryland (decedent’s residence), stocks and bonds, five money

- 7 market mutual funds, a money market bank account, a checking bank

account, jewelry, and household effects and furniture.

On or about January 4, 1995, Mr. Grant and Ms. Adams, as

personal representatives of the estate, filed Form 706, United

States Estate (and Generation-Skipping Transfer) Tax Return

(estate tax return), which showed estate tax due of $60,118.

In

determining that amount of estate tax due, the estate tax return

claimed a credit for state death taxes of $23,911.

The Register

of Wills, Montgomery County, Maryland, had determined that

Maryland inheritance tax of $8,663.30 was due on $866,330 of the

decedent’s nonprobate assets consisting of $405,000 of real

property and $461,330 of personal property.

The estate tax return reported as part of decedent’s gross

estate, inter alia, the following assets:

decedent’s residence

valued as of the date of decedent’s death pursuant to an appraisal at $405,000; stocks, including dividends, valued at

$263,830; five money market mutual funds with total funds,

including dividends, of $121,603; a checking bank account with

funds of $31,274; a money market bank account with funds of

$17,879; and a joint money market mutual fund with funds of

$7,228.

According to Schedule G of the estate tax return, the

value of the decedent’s nonprobate property was $865,480.

That

return also indicated that decedent did not have any debts and

that there were no mortgages or liens on any property which she

- 8 owned.

The estate tax return claimed deductions for (1) $5,481

of Schedule J expenses (“Funeral Expenses and Expenses Incurred

in Administering Property Subject to Claims”), which included

$1,865 of attorney’s fees, and (2) $48,102 of Schedule L expenses

(“Expenses Incurred in Administering Property Not Subject to

Claims”) (Schedule L).

None of the expenses claimed in Schedule L was approved by a

Maryland court.

Those expenses consisted of:

(1) $11,250 and

$5,625 of executors’ fees paid to Mr. Grant and Ms. Adams,

respectively;3 (2) $840 of accountant’s fees paid to Donald R.

Wilson; (3) (a) $300 of appraisal fees to appraise decedent’s

residence, (b) $150 of appraisal fees to appraise certain of

decedent’s personal property, (c) $195 of appraisal fees to

appraise decedent’s jewelry, and (d) $240 of appraisal fees to

appraise decedent’s silverware; and (4) $29,5024 of miscellaneous

administration expenses (miscellaneous administration expenses).

Schedule L contained the following descriptions of the items of

miscellaneous administration expenses enumerated in that schedule

as set forth below:

3

The executors’ fees were calculated by multiplying an

hourly rate of $75 times (1) 150 hours in the case of Mr. Grant

and (2) 75 hours in the case of Ms. Adams.

4

The estate rounded the miscellaneous administration expenses claimed in Schedule L to the nearest dollar. For convenience, we shall do the same.

- 9 -

Item

Number

4

Description

Travel expenses to settle estate:

P. Walker Grant, Jr., personal representative

RFD 1 Box 3031, Killington VT 05751

4/11/94 Killington VT to Darnestown MD 505 mi, $2.75 tolls

4/24-25/94 Darnestown MD to Killington VT

via New Haven CT to broker for

transfer of stocks - 534 mi,

$13.85 tolls, Motel 6 New Haven

4/24 $42.55

5/2/94 Killington VT to Darnestown MD 520 mi, $2.75 tolls

6/5/94 Darnestown MD to Killington VT 505 mi, $2.75 tolls

6/16/94 Killington VT to Darnestown MD 505 mi, $2.75 tolls

7/14/94 Darnestown MD to Killington VT 505 mi, $2.75 tolls

7/19/94 Killington VT to Darnestown MD 525 mi, $4.65 tolls

8/8/94 Darnestown MD to Killington VT 525 mi, $3.65 tolls

8/19/94 Killington VT to Darnestown MD 525 mi, $4.65 tolls

9/22/94 Darnestown MD to Killington VT 525 mi, $3.65 tolls

11/28/94 Killington VT to Darnestown MD 525 mi, $4.65 tolls

12/11/94 Darnestown MD to Killington VT 525 mi, $3.65 tolls

Amount

Deducted

$149

212

154

149

149

149

157

156

157

156

157

156

- 10 -

Item

Number

5

Description

Travel expenses to settle estate:

Kathryn Lynn Grant Adams, personal representative

RR1 Box 6180 Plummers Ridge, Union (town of

Milton) NH 03887

4/3/94 Milton NH to Darnestown MD - 540

mi, $10.85 tolls, $5.73 food on

road

4/24/94 Darnestown MD to New Haven CT to

broker for transfer of stocks 318 mi, $13.85 tolls, Motel 6 New

Haven $42.55

4/25/94 New Haven CT to Darnestown MD 318 mi, $8.85 tolls, $14.26

food

5/20/94 Darnestown MD to Milton NH - 540

mi, $14.85 tolls

5/28/94 Milton NH to Darnestown MD - 540

mi, $10.85 tolls

8/19/94 Darnestown MD to Milton NH - 540

mi, $14.85 tolls

8/25/94 Milton NH to Darnestown MD - 540

mi, $10.85 tolls

8/27/94 Darnestown MD to Milton NH - 540

mi, $14.85 tolls

9/1/94 Milton NH to Logan Airport, Boston

- 85 mi, $1.00 toll

Delta Airlines - Boston to Wash. DC

to Boston

meal at airport

9/5/94 meal at Washington airport

parking at Logan Airport

Logan Airport to Milton NH - 88 mi,

$2.00 tolls

9/12/94 Milton NH to Darnestown MD - 540

mi, $10.85 tolls

10/25/94 Darnestown MD to Milton NH - 540

mi, $14.85 tolls

10/28/94 Milton NH to Darnestown MD - 549

mi, $9.45 tolls, $5.16 food

Amount

Deducted

$173

149

115

171

167

171

167

171

26

60

4

10

50

28

167

171

174

- 11 -

Item

Number

6

7

8

Description

Geoffrey C. Adams, RR1 Box 6180 Plummers

Ridge, Union NH 03887 - expenses of travel

from home in Milton NH with helper, both to

work on house

6/10/94 to MD - 551 mi, $8.85 tolls, $29.73

meals

6/14/94 return - 470 mi, $13.85 tolls

6/24/94 to MD - 565 mi, $8.85 tolls, $32.92

meals

6/27/94 return - 455 mi, $13.85 tolls,

$22.00 meals

local miles in MD for supplies & dumping

trash - 493 mi

Amount

Deducted

$198

150

206

168

143

Aetna Casualty Co., Hartford CT

10/21/94 Excess liability policy premium

36

Banner Glass, Rockville MD

replace glass table top - 8/15 $97.56

98

9

Barrons, Gaithersburg MD

6/28/94 siding - $13.23

7/6/94 shutters - $83.90

97

10

Bell Atlantic/C&P Telephone

4/8/94 bill $112.39

9/8/94 bill $32.89

5/8/94 bill $ 58.61 10/8/94 bill $25.74

6/8/94 bill $ 46.63 11/8/94 bill $25.13

7/8/94 bill $ 41.73 12/8/94 bill $25.48

8/8/94 bill $ 31.82

400

11

Bettar Appliance, Kensington MD

12/2/94 oven selector switch - $79.80

80

12

Mark Canon, c/o Mr. & Mrs. Michael Canon

RR 1 Box 33A Herricks Rd., Brookville ME

04617

6/11-15/94 labor & expenses: yard work,

window cleaning, trash hauling - 38¼ hr @

$8/hr, 11 trips to dump, misc. expenses

389

- 12 -

Item

Number

Amount

Deducted

Description

13

Steve Chorba, 314 Elm St., Milton, NH 03851

6/10-13/94 labor: yard work, window

cleaning - 44 3/4 hr @ $8/hr,

misc. expenses $400

6/24-27/94 labor: yard work - 35 hr @

$8/hr, misc. expenses $350

7/7/94 labor: unloading furniture, etc. in

Milton NH $20

8/31/94 labor: storing furniture in Milton

NH $20

14

Christopher’s Quince Orchard Hardware,

Gaithersburg MD - various miscellaneous

supplies for lawn, garden & landscaping;

painting; tile repair & grouting; window

repairs; flagstone & concrete cleaning and

finishing; plumbing repair; nails, screws &

other misc. hardware

5/04/94-$ 13.11

5/16/94-$ 10.69

6/01/94-$ 14.60

6/18/94-$108.66

6/19/94-$103.90

6/19/94-$ 19.82

6/20/94-$ 46.18

6/25/94-$ 9.76

6/25/94-$ 2.09

6/25/94-$ 11.54

6/25/94-$ 32.72

6/29/94-$ 5.01

7/01/94-$ 4.18

7/09/94-$10.67

7/12/94-$ 3.04

7/15/94-$ 3.46

7/16/94-$ 6.07

7/16/94-$ 6.49

7/24/94-$ 3.48

7/30/94-$ 9.97

8/01/94-$ 7.56

8/12/94-$19.40

9/04/94-$46.18

9/04/94-$ 0.48

9/09/94-$ 6.07

$790

617

9/10/94-$ 8.49

9/13/94-$ 9.01

9/14/94-$ 9.75

9/15/94-$ 2.72

9/30/94-$24.19

10/01/94-$10.38

10/01/94-$ 4.19

10/08/94-$ 3.77

10/09/94-$ 8.39

10/14/94-$13.82

10/16/94-$ 8.39

9/30/94-$ 8.39

15

Color Tile, Gaithersburg MD

7/6/94 grout saw - $10.49

8/23/94 additional blades $4.19

15

16

CPI Photo, Lake Forest Mall, Gaithersburg

MD

11/9/94 duplicates & enlargements of

property-$54.39

54

17

Crown Gasoline, Quince Orchard,

Gaithersburg MD

5/26/94 gas for mowing - $5.00

5

- 13 -

Item

Number

Description

Amount

Deducted

18

CVS Pharmacy, Quince Orchard, Gaithersburg

MD

8/9/94 floor protectors, shelf paper $10.45

8/11/94 floor protectors - $4.18

10/9/94 floor protectors - $3.55

$18

19

Darnestown Office Products, Quince Orchard,

Gaithersburg MD 10/8/94 tape - $1.88

2

20

Darnestown Texaco, Darnestown MD

6/12/94 gas for mowing & trimming - $6.34

9/2/94

?

?

?

- $7.00

13

21

Fisher Lumber (Leland L. Fisher, INC.),

Rockville MD

7/11/94 grouting supplies - $11.81

12

22

Gaithersburg Ford-Kubota Tractor Co.,

Gaithersburg MD

9/10/94 repair parts for mower - $5.04

9/20/94

?

?

?

?

- $4.19

9

23

Gaithersburg Paint Center, Gaithersburg MD

5/22/94 exterior window & trim paint &

supplies-$31.40

31

24

Ron Gilk, Germantown MD

6/9/94 seal driveway - $336.00

336

25

P. Walker Grant, Jr. reimbursement for expenses of moving personal property and furniture to heirs’ homes in rented truck

7/6-8/94 gas $141.25, tolls $15.10,

motel $31.80

9/5-7/94 gas $140.87, tolls $17.80

347

26

Griffith-Steuart/Steuart Fuels (Div. of

Griffith Consumers), Baltimore MD - heating

oil

3/28/94 $229.70

11/29/94 $ 76.86

9/20/94 $101.53

12/21/94 $133.64

11/7/94 $ 48.36

590

- 14 -

Item

Number

Description

Amount

Deducted

27

Hechinger, Rockville & Gaithersburg MD

5/21/94 paint supplies- $1.46

6/26/94 carpentry supplies- $4.43

8/4/94 garden rake- $10.49

8/10/94 flagstone sealer- $17.09

8/15/94

?

?

- $17.09

10/12/94 grass seed- $23.08

10/14/94

?

? - $46.16

$120

28

Home Depot, Gaithersburg MD

5/15/94 painting supplies, primer - $28.74

5/31/94 driveway sealer - $29.67

6/5/94 paint & carpentry supplies - $43.63

6/26/94 carpentry material - $13.89

7/11/94 electrical devices & trim, door &

window hardware - $206.07

7/23/94 trim & hardware items - $24.47

8/30/94 marble cleaning & finish supplies$20.76

9/2/94

?

?

?

?

? -$9.81

377

29

Lizz Huntzberry, Chewsville Rd., Smithburg

MD

5/31/94 lawn mowing & trimming - $195.00

8/8/94

?

?

?

?

- $160.00

355

30

Johnson’s Flower & Garden Center, Quince

Orchard, Gaithersburg MD

7/30/94 plants & fertilizer

72

31

K-Mart, Kentlands Square, Gaithersburg MD

8/9/94 Perlite soil additive - $4.77

9/7/94 bath mats - $26.23

9/19/94 vacuum cleaner bags - $4.19

35

32

Kinko’s, Gaithersburg MD

10/12/94 copies of property plat - $1.84

2

33

King & Sons, Burtonville MD

6/3/94 pump & inspect septic tank $170.00

170

34

Lighting Designers, Rockville MD

5/18/94 replacement front door & kitchen

light fixtures - $142.59

143

- 15 -

Item

Number

35

Description

Lowe’s, Kentlands Square, Gaithersburg MD

supplies for garden, masonry, plumbing,

painting

6/11/94-$ 4.28

8/03/94-$ 7.56

8/4/94 -$ 3.19

8/6/94 -$45.72

8/6/94 -$ 5.11

8/07/94-$33.14

8/09/94-$12.42

8/13/94-$ 6.19

9/09/94-$ 4.27

9/13/94-$ 7.85

Amount

Deducted

$203

9/14/94-$12.80

9/15/94-$10.74

9/17/94-$18.51

10/14/94-$31.23

36

South T. Lynn, 13701 Deakins Lane

Germantown MD 20874

5/31/94 Deakins Lane roadway maintenance$100.00

11/22/94

?

?

?

?

$100.00

200

37

Meadows Farms, Germantown MD

9/3/94 topsoil - $271.92

272

38

Montgomery County, MD, Rockville MD

4/22/94 additional death certificates $72.00

9/15/94 property taxes - $5,673.69

39

Original Custom Interiors, Herald Harbor MD

8/8/94 drapery alteration - $60.00

60

40

Penn Auto, Gaithersburg MD

5/24/94 fuses for mowing tractor - $1.57

8/1/94 oil filler cap for tractor - $5.24

7

41

J C Penney, Lake Forest Mall, Gaithersburg

MD

9/18/94 drapes and hardware - $36.23

36

42

Pepco (Potomac Electric Power Co.), Washington DC

1,571

2/23/94-3/25/94 $ 76.72

3/25/94-4/21/94 $ 63.20

4/21/94-5/19/94 $ 69.26

5/19/94-6/21/94 $356.24

6/21/94-7/22/94 $451.52

43

5,746

7/22/94-8/22/94 $224.68

8/22/94-9/20/94 $164.97

9/20/94-10/21/94 $112.34

10/21/94-11/18/94 $ 52.36

Plumbing World, Gaithersburg MD

9/9/94 plumbing repair materials - $5.46

5

- 16 -

Item

Number

Description

Amount

Deducted

44

Polyzo’s Painting Inc., Silver Spring MD

7/15/94 interior & exterior painting $4,000.00

7/26/94

?

?

?

?

$750.00

45

Potomac Nursery, Potomac MD

9/4/94 plants - $180.74

9/13/94 grass seed - $15.74

196

46

Potomac Valley Bank, branch at Potomac MD

4/11/94 safe deposit box rental - $45.00

45

47

Pro-Graf 1-HR Photo, Gaithersburg MD

11/10/94 property photos developing &

printing$24.07

11/19/94

?

?

?

?

$33.52

58

48

Rent-A-Wreck, Rockville MD

7/8/94 truck rental, move effects to NH &

VT$318.33

9/7/94 ?

?

?

?

? ?$300.93

619

49

Safeway, Quince Orchard, Gaithersburg MD

7/4/94 packing materials - $13.61

8/10/94 plants - $6.28

11/5/94 light bulbs - $12.14

32

50

Sears, Roebuck & Co., Lake Forest Mall,

Gaithersburg MD

7/28/94 drapery traverse rod - $41.99

42

51

Southern States Co-op Inc., Gaithersburg MD

11/25/94 fence repair material - $3.67

4

52

Staples, Rockville MD

10/9/94 masking tape - $4.47

4

$4,750

- 17 -

Item

Number

Description

Amount

Deducted

53

Strosniders Hardware, Potomac MD

6/11/94 window & sash cleaning materials $65.08

6/12/94 broken window repair materials $36.04

6/13/94 grass trimmer line - $7.33

54

Timberidge Farm, Mt. Airy MD

11/25/94 fence repair lumber - $5.00

55

Universal Floors Inc., Gaithersburg MD

7/26/94 refinish hardwood floors $1,405.00

8/3/94

?

?

?

$2,100.00

56

USPS

4/8, 5/5 & 9/2/94 stamps - $40.60

5/28/94 postage - $2.75

10/7 & 10/19/94 postage - $1.73

11/10/94 postage

46

57

several local high school kids, full names

& addresses unknown, for misc. labor

8/13/94 move furniture-2 for 3 hrs @

$7/hr-$42.00

9/4/94 yard work, windows-2 for day @ $50$100.00

142

58

P. Walker Grant, Jr. - reimbursement for

local mileage incurred in settling estate

2101 mi @ $0.29/mi PAID

609

Kathryn Lynn Grant Adams - reimbursement

for local mileage incurred in settling estate

704 mi @ $0.29/mi PAID

204

Move trailer of furniture to temporary

storage in Milton NH after sale of house 540 miles, estimate quoted @ $2/mi ESTIMATED

1,080

59

60

$108

5

3,505

- 18 After decedent’s death, the Trust filed its initial Form

1041, U.S. Income Tax Return for Estates and Trusts (Trust income

tax return), for the period April 2, 1994 (the date of decedent’s

death) through December 31, 1994.

The Trust income tax return

showed, inter alia, in Schedule B (“Income Distribution Deduction”) distributable net income totaling $3,086, which consisted

of $3,006 of adjusted total income and $80 of adjusted tax-exempt

interest, and “Other amounts paid, credited, or otherwise required to be distributed” of $314,968.

In December 1996, approximately two years and eight months

after decedent’s death, decedent’s residence was sold for approximately $440,000.

Respondent issued a notice of deficiency (notice) with

respect to decedent’s estate.

In the notice, respondent disal-

lowed executors’ fees of $16,875 and other expenses totaling

$29,502, and allowed accountant’s fees of $840 and appraisal fees

totaling $885, that were claimed in Schedule L.

In addition,

respondent allowed as Schedule L expenses $2,203 of trustees’

fees that were not claimed in Schedule L and $1,865 of attorney’s

fees that were claimed in Schedule J of the estate tax return.

OPINION

The estate bears the burden of demonstrating error in

respondent’s determinations and in establishing its entitlement

- 19 to deduct under section 2053 the expenses claimed.

See Rule

142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).

The estate contends that it is entitled to deduct under

section 2053(b) administration expenses consisting of executors’

fees totaling $16,875 and miscellaneous administration expenses

totaling $23,828.5

Respondent disagrees.

In determining the taxable estate, section 2053(b) allows

deductions of amounts representing expenses incurred in administering property not subject to claims which is included in the

gross estate, to the same extent such expenses would be allowable

as deductions under section 2053(a) if such property were subject

to claims, and such amounts are paid before the expiration of the

period of limitation for assessment provided in section 6501.

Section 20.2053-8, Estate Tax Regs., provides in pertinent part

with respect to the deductibility of expenses in administering

property not subject to claims:

Usually, these expenses are incurred in connection with

the administration of a trust established by a decedent

during his lifetime. * * *

(b) These expenses may be allowed as deductions

only to the extent that they would be allowed as deductions under the first category [of deductions set forth

in section 20.2053-1(a)(1), Estate Tax Regs.] if the

property were subject to claims. See §20.2053-3.

The

5

On brief, the estate concedes that it is not entitled to

deduct $5,674 of real estate taxes that were claimed as part of

item 38 in Schedule L of the estate tax return because those

taxes accrued before the date of decedent’s death.

- 20 only expenses in administering property not subject to

claims which are allowed as deductions are those occasioned by the decedent’s death and incurred in settling

the decedent’s interest in the property or vesting good

title to the property in the beneficiaries. Expenses

not coming within the description in the preceding

sentence but incurred on behalf of the transferees are

not deductible.

(c) The principles set forth in paragraphs (b),

(c), and (d) of § 20.2053-3 (relating to the allowance

of executor’s commissions, attorney’s fees, and miscellaneous administration expenses of the first category

[of deductions set forth in section 20.2053-1(a)(1),

Estate Tax Regs.]) are applied in determining the

extent to which trustee’s commissions, attorney’s and

accountant’s fees, and miscellaneous administration

expenses are allowed in connection with the administration of property not subject to claims.

The only dispute between the parties under section 2053(b)

is whether the administration expenses claimed as deductions

would be allowable as deductions under section 2053(a)(2).

Section 2053(a)(2), relating to expenses incurred in administering property included in the gross estate and subject to claims,

allows a deduction from the value of the gross estate of “such

amounts * * * for administration expenses * * * as are allowable

by the laws of the jurisdiction * * * under which the estate is

being administered.”

Section 20.2053-3(a), Estate Tax Regs.,

provides that amounts deductible as

“administration expenses” of the first category * * *

[under section 2053(a)(2)] 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 persons entitled to it. * * *

Expenditures not essential to the proper settlement of

- 21 the estate, but incurred for the individual benefit of

the heirs, legatees, or devisees, may not be taken as

deductions. Administration expenses include (1) executor’s commissions; (2) attorney’s fees; and (3) miscellaneous expenses. * * *

We turn first to the executors’ fees totaling $16,875 which

the estate contends are allowable as deductions under section

2053(a)(2) and therefore are deductible under section 2053(b).

The executors’ fees consisted of $11,250 paid to Mr. Grant and

$5,625 paid to Ms. Adams which were claimed in Schedule L.

In

the notice, respondent disallowed those claimed executors’ fees

but allowed deductions under section 2053(b) for $2,203 of

trustees’ fees that were not claimed in Schedule L.

On brief,

respondent concedes that, in addition to the $2,203 of trustees’

fees allowed in the notice, the estate is entitled to deduct

under section 2053(b) trustees’ fees of $3,517 and executors’

fees of $990.

Thus, respondent concedes that the estate is

entitled to deduct under section 2053 a total of $6,710 of

executors’ fees and trustees’ fees.

Consequently, the amount of

executors’ fees claimed by the estate that remains in dispute is

$10,165.

Section 20.2053-3(b), Estate Tax Regs., entitled “Executor’s

commissions”, provides in pertinent part:

The executor * * * may deduct his commissions in such

an amount as has actually been paid * * *. If the

amount of the commissions has not been fixed by decree

of the proper court, the deduction will be allowed

- 22 * * * to the extent that all three of the following

conditions are satisfied:

(i) The district director is reasonably satisfied

that the commissions claimed will be paid;

(ii) The amount claimed as a deduction is within

the amount allowable by the laws of the jurisdiction in

which the estate is being administered; and

(iii) It is in accordance with the usually accepted practice in the jurisdiction to allow such an

amount in estates of similar size and character.

In support of its position that it is entitled to deduct

under section 2053(b) executors’ fees totaling $16,875, the

estate relies in part on Md. Code Ann., Est. & Trusts, sec. 7601(b) (1998 Supp.) (Md. Code Ann., Est. & Trusts, sec. 7601(b)).

That section prescribes the maximum compensation

payable to a personal representative of an estate as follows:

(b) Computation of compensation.--Unless the will

provides a larger measure of compensation, upon petition filed in reasonable detail by the personal representative * * * the court may allow the commissions it

considers appropriate. The commissions may not exceed

those computed in accordance with the table in this

subsection.

If the property subject to

The commission may

administration is:

not exceed:

Not over $20,000 . . . . . . . . . . . . . . . . . 9%

Over $20,000 . . . . . . . . $1,800 plus 3.6% of the

excess over $20,000

According to the estate, the maximum compensation, determined pursuant to Md. Code Ann., Est. & Trusts, sec. 7-601(b), of

Mr. Grant and Ms. Adams, the personal representatives of dece-

- 23 dent’s estate, was $32,237.6

The estate calculated that amount

as follows:

9% x $20,000

3.6% x $845,4807

Total

= $1,800

= 30,437

32,237

The estate reasons that, because it claimed only $16,875 as

executors’ fees for its personal representatives, and not the

maximum compensation of $32,237 that it believes it could have

claimed under Md. Code Ann., Est. & Trusts, sec. 7-601(b), the

full amount of such compensation claimed in Schedule L of the

estate tax return, i.e., $16,875, is reasonable and allowable by

Maryland law.

According to the estate, “Meeting the tests for

allowability by local law, it [the amount of executors’ fees

claimed by the estate] is also allowable by federal law.”

6

The estate argues that the personal representatives of

decedent’s estate also were entitled to a commission on the

proceeds of the sale of decedent’s residence of up to 9% of those

proceeds. In support of that argument, the estate apparently

relies on Md. Code Ann., Est. & Trusts, sec. 7-601(d)(1) (1991).

That provision was repealed, effective Jan. 1, 1992, and was not

in effect when decedent died on Apr. 2, 1994, or thereafter

during the administration of decedent’s probate property. See

Md. Code Ann., Est. & Trusts, sec. 7-601(d) (1998 Supp.). In any

event, the provision on which the estate relies in Md. Code Ann.,

Est. & Trusts, sec. 7-601(d)(1) (1991) applied only to the sale

of real property subject to administration and, even as to such

real property, the personal representative was required to

petition a Maryland court and explain in reasonable detail why a

commission with respect to such a sale should have been allowed.

7

The estate arrived at $845,480 by deducting $20,000 from

$865,480, i.e., the value of the nonprobate property reported in

Schedule G of the estate tax return.

- 24 We reject the estate’s position that the personal representatives of decedent’s estate would have been entitled to maximum

compensation under Md. Code Ann., Est. & Trusts, sec. 7-601(b) in

the amount of $32,237.

The maximum compensation of the personal

representative of an estate prescribed by that section is designed to compensate such representative for all of the ordinary

work of administering an estate subject to administration, see

Lehman v. Kairys, 217 Md. 359, 364, 142 A.2d 546, 548 (1958);

Talbert v. Reeves, 211 Md. 275, 283, 127 A.2d 533, 538 (1956),

and is determined by reference to the amount of property subject

to administration.

The value of decedent’s property as of the

date of her death that was subject to administration was no more

than $11,253.8

Thus, the maximum compensation of the estate’s

personal representatives under Md. Code Ann., Est. & Trusts, sec.

8

The value of decedent’s non-Trust property as of the date

of decedent’s death was $11,253. Included within that non-Trust

property was a money market mutual fund account with a balance of

$7,228, which decedent and Ms. Adams jointly owned on the date of

decedent’s death. The parties do not address whether under

Maryland law that jointly owned money market mutual fund account

would be considered property subject to administration. We

assume for purposes of this Opinion that the jointly owned money

market mutual fund account was property subject to administration

in Maryland, an assumption which favors the estate in calculating

the maximum compensation payable to a personal representative

under Md. Code Ann., Est. & Trusts, sec. 7-601(b).

- 25 7-601(b) would have been $1,012.77 ($11,253 x 9%), and not

$32,237 as claimed by the estate.9

We also reject the estate’s position that “Meeting the tests

for allowability by local law, it [the amount of executors’ fees

claimed by the estate] is also allowable by federal law.”

In

determining the deductibility of administration expenses under

section 2053(a)(2), the deductions claimed must be allowable not

only by the State law under which the estate is administered but

also by Federal law.

See Estate of Love v. Commissioner, 923

F.2d 335, 337 (4th Cir. 1991), affg. T.C. Memo. 1989-470; Estate

of Smith v. Commissioner, 510 F.2d 479, 482-483 (2d Cir. 1975),

affg. 57 T.C. 650 (1972); Estate of Posen v. Commissioner, 75

T.C. 355, 367 (1980).

To satisfy Federal law, the deductions

claimed as administration expenses must satisfy the requirements

of section 2053 and the regulations thereunder.

9

Respondent concedes that the estate is entitled to deduct

executors’ fees determined under Md. Code Ann., Est. & Trusts,

sec. 7-601(b). However, respondent made a mathematical error in

determining the value of decedent’s non-Trust property and,

consequently, made an error in calculating the maximum amount of

executors’ fees allowable under Md. Code Ann., Est. & Trusts,

sec. 7-601(b). Respondent calculated the value of decedent’s

non-Trust property to be $10,997 and the maximum compensation of

a personal representative under Md. Code Ann., Est. & Trusts,

sec. 7-601(b) to be $990 ($10,997 x 9%). In fact, the value of

decedent’s non-Trust property was $11,253, consisting of $256 in

cash and traveler’s checks, life insurance valued at $1,025,

$7,228 in a jointly owned money market mutual fund, and $2,744 of

other miscellaneous property.

- 26 The estate contends that none of the time spent by Mr. Grant

and Ms. Adams, which was used to determine the amount of executors’ fees claimed in Schedule L, was for management of the Trust

and that all of that time was spent to settle the estate.

record before us, we disagree.

that contention.

On the

Nothing in the record supports

To the contrary, the record shows that the

value of decedent’s nonprobate property, as reported in Schedule

G of the estate tax return, was $865,480, whereas the value of

the non-Trust property was only $11,253.

The record also estab-

lishes that virtually all of the miscellaneous administration

expenses were incurred with respect to decedent’s nonprobate

property.

Based on the record presented, we believe that most of

the time spent by Mr. Grant and Ms. Adams must have related to

that nonprobate property.

On the record before us, we find that the estate has failed

to show that it is entitled to deduct as executors’ fees under

Md. Code Ann., Est. & Trusts, sec. 7-601(b) an amount greater

than $1,012.77.10

10

We note that although the estate stated in Schedule L that

the executors’ fees claimed were calculated on the basis of 150

hours spent by Mr. Grant at $75 an hour and 75 hours spent by Ms.

Adams at $75 an hour, the record contains no explanation as to

how the $75 hourly rate was determined. In addition, it is

noteworthy that Mr. Grant and Ms. Adams, the personal representatives of the estate and two of the three successor trustees of

the Trust, hired an attorney, an accountant, and appraisers who

assisted them in administering decedent’s estate. The fees for

(continued...)

- 27 The estate argues that, assuming arguendo that some of the

time spent by Mr. Grant and Ms. Adams were considered to have

been spent by them as successor trustees of the Trust, the estate

would be entitled under section 2053(b) to deduct trustees’ fees

allowable under Md. Code Ann., Est. & Trusts, sec. 14-103(c) and

(e) (1991) (Md. Code Ann., Est. & Trusts, sec. 14-103(c) and (e))

in the amounts of $1,388 and $4,327, respectively.11

Those

10

(...continued)

those individuals employed by Mr. Grant and Ms. Adams that were

claimed as deductions in the estate tax return were allowed as

administration expenses by respondent. Finally, we note that the

estate makes no claim that the personal representatives of

decedent’s probate estate are entitled to extraordinary executors’ fees under Maryland law. The record contains no order of a

Maryland court allowing any such extraordinary fees, nor is there

any evidence in the record showing that an application for such

an order was ever made to a Maryland court. Moreover, the

summary prepared by the estate’s personal representatives that is

part of the record and that sets forth the nature of the various

tasks performed by them and the amount of time spent on such

tasks does not establish that any such tasks were extraordinary.

To the contrary, the tasks listed in that summary establish that

the work performed by the estate’s personal representatives

constituted the ordinary work of administering decedent’s probate

estate. To illustrate, the tasks listed on the summary prepared

by the estate’s personal representatives include the following:

Find, identify, and gather information, papers, and effects;

obtain death certificates; meet with lawyer and arrange appraisal

of personal effects; meet with accountant; collect and organize

papers including checks, bills, dividend records; effect stock

transfers; prepare small estate/personal representative papers;

start inventory; arrange for house appraisal; miscellaneous

administration; miscellaneous accounting; appraisal for jewelry

and silver; preparing for estate tax return. On the record

before us, we find that the estate has failed to show that it is

entitled to any extraordinary executors’ fees under Maryland law.

11

We note that the declaration of trust provided that the

(continued...)

- 28 provisions of Maryland law, which relate to the calculation of

commissions for trustees, provide in pertinent part:

(c) Corpus commissions.-–Accounting from July 1,

1981, whether or not the trust was in existence at that

time, commissions are payable at the end of each year

upon the fair value of the corpus or principal held in

trust at the end of each year as follows:

(1) Four tenths of one percent on the first

$250,000;

(2) One fourth of one percent on the next

$250,000;

(3) Three twentieths of one percent on the next

$500,000; and

(4) One tenth of one percent upon any excess.

* * *

*

*

*

*

*

*

*

(e) Final distribution.-–Upon the final distribution of any trust estate, or portion of it, an allowance is payable commensurate with the labor and responsibility involved in making the distribution, including

the making of any division, the ascertainment of the

parties entitled, the ascertainment and payment of

taxes, and any necessary transfer of assets. The

allowance is subject to revision or determination by

any circuit court having jurisdiction. In the absence

of special circumstances the allowance shall be equal

to one half of one percent upon the fair value of the

corpus distributed. [Md. Code Ann., Est. & Trusts,

sec. 14-103(c), (e).]

Respondent concedes that the estate is entitled under

section 2053(b) to deduct trustees’ commissions in the respective

11

(...continued)

independent successor trustee of the Trust, Donald R. Wilson, or

such other independent successor trustee, was to receive “a

reasonable compensation from the Trust Estate for his or her

services.” The declaration of trust did not provide for any

compensation to be paid to Mr. Grant and Ms. Adams, who were to

serve with Donald R. Wilson as successor trustees of the Trust.

- 29 amounts of $1,388 and $4,332 determined under Md. Code Ann., Est.

& Trusts, sec. 14-103(c) and (e), or total trustees’ commissions

of $5,720 which includes the $2,203 of trustees’ fees allowed by

respondent in the notice.

On the record before us, we find that

the estate has failed to show that it is entitled under section

2053(b) to deduct trustees’ commissions or fees determined under

Md. Code Ann., Est. & Trusts, sec. 14-103(c) and (e) in excess of

that total amount (i.e., the total of $1,388 and $4,33212 under

those respective provisions of Maryland law).

We turn now to the $23,828 of miscellaneous administration

expenses that the estate claimed in Schedule L and that remain in

dispute.13

Those expenses may be broken down into the following

broad categories of expenses, which were claimed for the purposes

alleged in Schedule L and enumerated in that schedule as the

following items of expense:

12

(1) Items 4 and 5:

travel expenses

Respondent apparently calculated the amount of trustees’

commissions allowable under Md. Code Ann., Est. & Trusts, sec.

14-103(e) as $4,332 by multiplying one-half of one percent times

$866,330, which was the value of decedent’s nonprobate assets as

determined by the Register of Wills, Montgomery County, Maryland,

in calculating inheritance tax due to Maryland. The estate

calculated the amount of trustees’ commissions allowable under

Md. Code Ann., Est. & Trusts, sec. 14-103(e) as $4,327 by multiplying the value of decedent’s nonprobate property that was

included in the estate tax return in decedent’s gross estate

(i.e., $865,480) times one-half of one percent. We shall accept

respondent’s concession in the estate’s favor that the estate is

entitled under sec. 2053(b) to deduct $4,332 as trustees’ commissions under Md. Code Ann., Est. & Trusts, sec. 14-103(e).

13

See supra note 5.

- 30 of Mr. Grant and Ms. Adams for round trips from Vermont and New

Hampshire, respectively, to Maryland “to settle estate”; (2) item

6:

travel expenses of Geoffrey C. Adams “with helper,” for round

trips from New Hampshire to Maryland, “both to work on house”;

(3) items 58 and 59:

reimbursements at 29 cents per mile to Mr.

Grant “for local mileage [2,101 miles]” and to Ms. Adams “for

local mileage [704 miles]”, “incurred in settling estate”;

(4) items 10, 26, and 42:

telephone bills with closing dates

from April 8, 1994, through December 8, 1994; home heating fuel

bills with closing dates from March 28, 1994, through December

21, 1994; and electric bills with closing dates from February 23,

1994, through November 18, 1994;14 (5) items 8, 9, 11 through 15,

17 through 24, 27 through 31, 33 through 37, 39 through 41, 43

through 45, 49 through 55, and 57:

various expenses incurred

with respect to work done to decedent’s residence and/or the

effects therein, including replacing glass top table; siding;

shutters; replacing oven switch; yard work; window cleaning;

trash hauling; miscellaneous supplies for lawn, garden, and

landscaping; tile repair and grouting; window repairs; flagstone

and concrete cleaning and finishing; plumbing repairs; floor

protectors; painting exterior windows and trim; sealing driveway;

14

Respondent concedes that the estate is allowed to deduct

$229 for home heating fuel and $140 for electricity, which

amounts were incurred prior to decedent’s death.

- 31 carpentry work; electrical work; lawn mowing; plants and fertilizer; replacing front door and kitchen light fixtures; supplies

for garden; masonry; plumbing; roadway maintenance; top soil;

drapery alteration; interior and exterior painting; plants and

grass seed; drapery traverse rod; window and sash cleaning

materials; and refinishing hardwood floors; (6) items 13, 25, 48,

49, 57, and 60:

various expenses for moving furniture and other

household effects and personal property of decedent from Maryland

to New Hampshire and temporary storage of furniture in New

Hampshire after the sale of decedent’s residence in December

1996; and (7) items 7, 16, 31, 32, 38, 46, 47, and 56:

various

miscellaneous expenses, including expenses for “Excess liability

policy premium”, “duplicates & enlargements of property”; bath

mats and vacuum cleaner bags; copies of property plat; additional

death certificates; safe deposit rental; developing and printing

property photos; and postage.

It is significant that, except for the descriptions of the

$23,828 of miscellaneous administration expenses at issue which

are set forth in Schedule L of the estate tax return, the record

is devoid of any evidence elaborating on those claimed expenses.

In the briefs that the estate filed in this case, the estate

makes various factual allegations about those expenses.

Many of

those allegations are not supported by the record in this case

- 32 and consequently have been disregarded by the Court.

See Rule

143(b).

Section 20.2053-3(d), Estate Tax Regs., relating to deductions for miscellaneous administration expenses, provides in

pertinent part:

(d) Miscellaneous administration expenses.

(1) Miscellaneous administration expenses include such

expenses as court costs, surrogates’ fees, accountants’

fees, appraisers’ fees, clerk hire, etc. Expenses

necessarily incurred in preserving and distributing the

estate are deductible, including the cost of storing or

maintaining property of the estate, if it is impossible

to effect immediate distribution to the beneficiaries.

Expenses for preserving and caring for the property may

not include outlays for additions or improvements; nor

will such expenses be allowed for a longer period than

the executor is reasonably required to retain the

property.

(2) Expenses for selling property of the estate

are deductible if the sale is necessary in order to pay

the decedent’s debts, expenses of administration, or

taxes, to preserve the estate, or to effect distribution. The phrase “expenses for selling property”

includes brokerage fees and other expenses attending

the sale, such as the fees of an auctioneer if it is

reasonably necessary to employ one. * * *

On the record before us, we find that the estate has failed

to establish that the expenses claimed in Schedule L for the

travel of Mr. Grant and Ms. Adams from Vermont and New Hampshire,

respectively, to Maryland were necessarily incurred in preserving

and distributing the estate’s assets.

In this connection, the

Attorney General of Maryland has determined upon at least two

occasions that incidental expenses incurred by nonresident

- 33 executors in the course of the ordinary business of administering

an estate in Maryland, including long distance telephone calls,

hotel expenses, and airplane tickets, will not be considered

expenses necessary to protect the estate if incurred only because

the executors are nonresidents.

See 59 Op. Atty. Gen. 613 (Md.

1974); 48 Op. Atty. Gen. 419 (Md. 1963).15

On the record before us, we further find that the estate has

failed to establish that the expenses claimed in Schedule L to

reimburse Mr. Grant and Ms. Adams for a total of 2,805 miles of

“local mileage incurred in settling estate” were necessarily

15

Although since those opinions of the Attorney General of

Maryland were issued there have been some changes in Md. Code

Ann., Est. & Trusts, sec. 7-601, relating to compensation of the

personal representatives of an estate, none of those changes has

had any effect on those opinions. Indeed, in 59 Op. Atty. Gen.

613 (Md. 1974), the Attorney General of Maryland cited with

approval 48 Op. Atty. Gen. 419 (Md. 1963) and 21 Op. Atty. Gen.

709 (Md. 1936) and indicated that those two latter opinions

“considered similar questions” to those being considered in 59

Op. Atty. Gen. 613 (Md. 1974). In addition, in 59 Op. Atty. Gen.

613 (Md. 1974), the Attorney General stated:

It is our opinion that the enactment of the present provisions of the Estates and Trusts Article was

not intended to substantially change the law * * * and

that the same result as reached in the above opinions

[48 Op. Atty. Gen. 419 (Md. 1963) and 21 Op. Atty. Gen.

709 (Md. 1936)] should continue to prevail.

Nor did the changes to Md. Code Ann., Est. & Trusts, sec. 7-601

that were enacted after 59 Op. Atty. Gen. 613 (Md. 1974) was

issued and that were in effect on the date of decedent’s death

and thereafter through the administration of the estate change

the law considered by that opinion of the Maryland Attorney

General. See Md. Code Ann., Est. & Trusts, sec. 7-601 (1991 &

Supp. 1998).

- 34 incurred in preserving and distributing the estate’s assets.

The

record is devoid of any evidence explaining what Mr. Grant and

Ms. Adams did when they traveled over 2,800 miles in Maryland.

The estate claims that virtually all of the other expenses

at issue were incurred (1) “to maintain, or prevent some degradation in, the condition of” decedent’s residence; (2) “for repairs

to enhance the salability of” decedent’s residence; and (3) “for

selling” decedent’s residence.16

We address first the estate’s

contention that the sale of decedent’s residence was necessary in

order to pay taxes because “the cash in the estate * * * [was]

insufficient” to do so and that therefore the expenses for the

last two purposes claimed satisfy section 20.2053-3(d)(2), Estate

Tax Regs.

We disagree.

While decedent’s estate might not have

had sufficient cash to pay taxes, it had more than enough cash

and liquid cash type assets to pay such taxes.

In this connec-

tion, the estate tax return reported as part of decedent’s gross

estate, inter alia, five money market mutual funds with total

funds of $121,603; a checking bank account with funds of $31,274;

and a money market bank account with funds of $17,879.

The

estate tax return showed estate tax due of $60,118, claimed a

16

Although not altogether clear from the record, it appears

that, except for decedent’s residence, most of decedent’s nonprobate property was distributed by the end of 1994.

- 35 credit for State death taxes of $23,911, and claimed $53,583 of

deductions.

On the record before us, we find that the estate had sufficient cash and liquid cash type assets to pay not only taxes but

also all of its debts and expenses without selling decedent’s

residence.

We therefore reject the estate’s position that the

sale of decedent’s residence satisfies section 20.2053-3(d)(2),

Estate Tax Regs., because that sale was necessary to pay taxes.

We further find on the instant record that the estate has failed

to show that any of the expenses which it claims were incurred

“for repairs to enhance the salability of” decedent’s residence17

and “for selling” that residence18 are deductible under section

2053.

Nonetheless, we believe on the record presented that it was

not possible to distribute all of decedent’s property, including

decedent’s residence and the household and other personal effects

located at that residence, immediately after decedent’s death.

Consequently, we find that certain expenses incurred in maintain-

17

On brief, the estate indicates that the expenses “for

repairs to enhance the salability of” decedent’s residence are

set forth in Schedule L as items 6, 8, 9, 12, 13 (to the extent

of $750), 14, 15, 19, 21, 23, 24, 27, 28, 30, 31, 34, 35, 37, 39,

41, 44, 45, 49 (to the extent of $18), 50, 52, 55, and 57.

18

On brief, the estate indicates that the expenses “for

selling” decedent’s residence are set forth in Schedule L as

items 16, 32, 33, and 47.

- 36 ing that residence, including certain utility expenses (i.e.,

telephone, home heating fuel, and electricity provided at decedent’s residence19), and in distributing those assets are deductible under section 2053 and the regulations thereunder.

20.2053-3(d)(1), Estate Tax Regs.

See sec.

In addition, on the record

before us, we find that certain expenses incurred for additional

death certificates, rental of a safe deposit box, postage, and

insurance on decedent’s residence are deductible under those

provisions.

Based on our examination of the entire record in this case,

and bearing in mind that the estate has the burden of proving its

entitlement under section 2053(b) to the miscellaneous administration expenses claimed, we find that the estate is entitled to

deduct $3,100 as administration expenses.20

19

Schedule L shows electric bills at decedent’s residence

for the period May 19, 1994, through Sept. 20, 1994, totaling

$1,197.41. For example, the electric bill for the period May 19,

1994, through June 21, 1994, was $356.24, and the electric bill

for the period June 21, 1994, through July 22, 1994, was $451.52.

Although the periods to which those bills relate covered late

spring and early summer 1994, there is no explanation in the

record why those bills were so high. One possible explanation is

that someone was living at the house during those periods.

Without further explanation as to why it was necessary to incur

such high electric bills during the period May 19, 1994, through

Sept. 20, 1994, the Court will allow only $100 per month for each

of the four months of electric bills covered by that period, or a

total of $400. The Court will allow in full the amount of the

remaining electric bills that were not conceded by respondent.

20

The expenses allowed by the Court consist of all or cer(continued...)

- 37 To reflect the foregoing and the concessions of parties,

Decision will be entered

under Rule 155.

20

(...continued)

tain of the expenses claimed in Schedule L of the estate tax

return as items 7, 10, 11, 13, 17, 18, 20, 22, 25, 26, 29, 38,

40, 42, 43, 46, 48, 49, 51, 53, 54, 56, and 57.