Section 20.2056(b)-4(a), Estate Tax Regs., implements the foregoing statutory provisions, in pertinent part, as follows:

(a) In general. The value, for the purpose of the marital deduction, of any deductible interest which passed from the decedent to his surviving spouse is to be determined as of the date of the decedent's death, except that if the executor elects the alternate valuation method under section 2032 the valuation is to be determined as of the date of the decedent's death but with the adjustment described in paragraph (a)(3) of § 20.20321. The marital deduction may be taken only with respect to the net value of any deductible interest which passed from the decedent to his surviving spouse, the same principles being applicable as if the amount of a gift to the spouse were being determined. In determining the value of the interest in property passing to the spouse account must be taken of the effect of any material limitations upon her right to income from the property. An example of a case in which this rule may be applied is a bequest of property in trust for the benefit of the decedent's spouse but the income from the property from the date of the decedent's1993 U.S. Tax Ct. LEXIS 64">*73 death until distribution of the property to the trustee is to be used to pay expenses incurred in the administration of the estate. [Emphasis added.]

The applicable provisions of Oklahoma law are:

(1) Okla. Stat. Ann. tit. 58, sec. 461 (West 1965), which provides:

If the testator makes provisions by his will or designates the estate to be appropriated for the payment of his debts, the expenses of administration, or family expenses, they must be paid according to such provisions 101 T.C. 351">*356 or designation, out of the estate thus appropriated, so far as the same is sufficient.

(2) Okla. Stat. Ann. tit. 60, sec. 175.36A (West 1971), which provides that administration expenses such as are involved herein "shall be chargeable against income", and

(3) Okla. Stat. Ann. tit. 84, sec. 186 (West 1990), which provides:

Any will of a decedent dying after December 31, 1981, which contains a marital deduction formula expressly providing that the spouse of the testator is to receive the maximum amount of property qualifying for the marital deduction allowable by federal law shall be construed as referring to the unlimited marital deduction provided by the Economic Recovery Tax Act of 1981 * * 1993 U.S. Tax Ct. LEXIS 64">*74 *

Petitioner argues that the provisions of the will and of Oklahoma law mandated that the administration expenses be charged to income, and, therefore, the estate tax statute and regulations, as set forth above, do not require the amount of the marital deduction, i.e., the husband's trust estate, see 101 T.C. 314">supra p. 352, to be reduced by those expenses. In making this argument, in initial briefs, petitioner relied on our decision in Estate of Street v. Commissioner, T.C. Memo. 1988-553. Our decision has since been reversed by the Court of Appeals for the Sixth Circuit. Estate of Street v. Commissioner, 974 F.2d 723">974 F.2d 723 (1992). Subsequent to this reversal, the Court invited the parties herein to submit supplemental briefs. In a supplemental brief, petitioner urges us to adhere to our position in Estate of Street.

Alternatively, petitioner argues that the decision of the Court of Appeals in Estate of Street is factually distinguishable in that it involved a single marital trust of the entire residue whereas, in the instant case, the residue is divided into two shares, one designed to qualify for the marital deduction1993 U.S. Tax Ct. LEXIS 64">*75 (hereinafter referred to as marital share) and the other designed to absorb the unified credit but not to qualify for the marital deduction (hereinafter referred to as nonmarital share). On this basis, petitioner argues that the nonmarital share is more than adequate to absorb the administration expenses so that Estate of Street does not apply, and there is no basis for requiring the marital deduction to be reduced by the amount of those expenses.

101 T.C. 351">*357 Respondent stands by the position articulated in the original briefs and asserts that our decision in Estate of Street was wrong and that the applicable estate tax statute and regulations set forth above require that the marital share be reduced by the amount of the administration expenses in order to arrive at the allowable amount of the marital deduction.

We have recently reevaluated our decision in 974 F.2d 723">Estate of Street v. Commissioner, supra, in light of the reversal by the Court of Appeals and have concluded, in a Court-reviewed opinion, that we should adhere to the position we took in that case. Estate of Hubert v. Commissioner, 101 T.C. 314">101 T.C. 314 (1993). Consequently, we sustain petitioner's1993 U.S. Tax Ct. LEXIS 64">*76 primary contention. Moreover, we consider Estate of Street to be distinguishable and therefore would sustain petitioner's alternative contention in any event for the reasons hereinafter set forth.

Initially, we note that the fact that the administration expenses were deducted for income tax purposes does not, in and of itself, necessitate a reduced marital deduction. Cf. Long v. Commissioner, 71 T.C. 1">71 T.C. 1, 71 T.C. 1">12 (1978), remanded on other grounds 660 F.2d 416">660 F.2d 416 (10th Cir. 1981); cf. Estate of Richardson v. Commissioner, 89 T.C. 1193">89 T.C. 1193, 89 T.C. 1193">1204 (1987). ² Furthermore, the provisions of State law and the will need to be examined in order to determine whether the conditions governing the application of section 20.2056(b)-4(a), Estate Tax Regs., have been met. Cf. Estate of Horne v. Commissioner, 91 T.C. 100">91 T.C. 100, 91 T.C. 100">105, 91 T.C. 100">109-110 (1988).

1993 U.S. Tax Ct. LEXIS 64">*77 We now turn to Oklahoma law and its application to the facts herein. Okla. Stat. Ann. tit. 60, sec. 175.36A (West 1971), 101 T.C. 314">supra p. 356, mandates that, in the absence of any direction to the contrary in decedent's will, the administration expenses involved herein are to be charged to income, and the provisions of the will, 101 T.C. 314">supra p. 352, coupled with the provisions of Okla. Stat. Ann. tit. 84, sec. 186 (West 1990), 101 T.C. 314">supra p. 356, mandate that the marital deduction be maximized. ³

101 T.C. 351">*358 Decedent's will divides the residue into two shares, ⁴ a marital share and a nonmarital share. The nonmarital share of $ 600,000 represents 32 percent of the gross estate of $ 1,870,317.50. The income of the estate over the 4-year period 1988 through 1991 exceeded $ 400,000. Thirty-two percent of that amount is $ 128,000, more than the amount of the administration expenses deducted in those years and of the anticipated total1993 U.S. Tax Ct. LEXIS 64">*78 of those expenses. It is thus apparent that the income attributable to the nonmarital share was more than sufficient to absorb the administration expenses. Thus, the expenses did not burden the marital share to any degree whatsoever. Nor did they burden the principal of the nonmarital share. Such being the case, there could be no shortfall of the nonmarital share from $ 600,000 with the result that we need not consider respondent's argument that the marital share would be required to make up any such shortfall and would, to that extent, have to be reduced.

The existence of two shares of the residue not only distinguishes 974 F.2d 723">Estate of Street v. Commissioner, supra, but also Estate of Roney v. Commissioner, 33 T.C. 801">33 T.C. 801 (1960), affd. per curiam 294 F.2d 774">294 F.2d 774 (5th Cir. 1961), cited by respondent, where the marital share likewise consisted of the entire residue. 1993 U.S. Tax Ct. LEXIS 64">*79 The fact that the income of the nonmarital share herein was more than adequate to cover the administration expenses similarly distinguishes Estate of Martin v. United States, 923 F.2d 504">923 F.2d 504 (7th Cir. 1991), also cited by respondent, where the nonmarital share was insufficient.

We think that the instant case falls within the ambit of the decided cases where the marital deduction was not reduced by the amount of death taxes or administration expenses because it was clear that, under the provisions of the will and State law, such items were to be charged to the nonmarital share and not to principal or income of the marital share. Estate of Haskell v. Commissioner, 58 T.C. 197">58 T.C. 197 (1972), affd. without published opinion 485 F.2d 679">485 F.2d 679 (3d Cir. 1973); Pyne v. United States, 638 F. Supp. 946">638 F. Supp. 946 (D. Me. 1986); Clary v. United States, 78-1 USTC par. 13,246, 42 AFTR 2d 78-6399 (D.S.C. 1978); First Trust Co. v. United States, 402 F. Supp. 778">402 F. Supp. 778 (D. Minn. 1975); Northeastern Pa. Natl. Bank & 101 T.C. 351">*359 Trust Co. v. United States, 360 F. Supp. 116">360 F. Supp. 116 (M.D. Pa. 1973).1993 U.S. Tax Ct. LEXIS 64">*80 Accordingly, we conclude that there is no direction nor other requirement that the income of the marital share herein "is to be used" to pay the administration expenses. Nor can it be said that there is any "material limitation" upon the right of decedent's husband to the income from the marital share. Thus, the provisions of section 20.2056(b)-4(a), Estate Tax Regs., see 101 T.C. 314">supra p. 355, are not applicable, with the result that the marital deduction should not be reduced by the amount of the administration expenses.

In order to take into account the foregoing and concessions by the parties on other issues,

Decision will be entered under Rule 155.