ABC Beverage Corp., f.k.a. Beverage America, Inc. - Page 2

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          166.1  After concessions,2 we must determine whether $10 million            
          of an $18 million debt became worthless in 1995.                            
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          The stipulation of facts and the accompanying exhibits are                  
          incorporated by this reference.  Petitioner’s principal place of            
          business was Northlake, Illinois, at the time it filed the                  
               The issue in this case arose as a management group attempted           
          to respond quickly to a changing business environment in the                
          bottling industry.  As background, we explain the bottling                  
          industry in general and the economic environment in which it                
          Bottling Industry                                                           
               The soft drink bottling business around 1986 consisted of              
          the "big three."  There were two well-known titans, Coke and                
          Pepsi, and a third quasi-independent network that encompassed all           
          other beverages.  Independent beverage labels at that time                  
          included drinks like Squirt, Dr. Pepper, 7-Up, Burns, and certain           
          "new age" drinks.  The independent bottling network was also                

               1All section references are to the Internal Revenue Code in            
          effect for the year at issue, and all Rule references are to the            
          Tax Court Rules of Practice and Procedure, unless otherwise                 
               2The parties have resolved all other issues raised in the              
          deficiency notice and the petition.                                         

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