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Properties could have exercised its rights under the lease to
cause Bottlers to buy the facilities when Bottlers failed to pay
the full amount of rent. Respondent further argues that
Properties could have found another third party to buy the
facilities.
Respondent’s focus on the theoretical possibilities of what
might occur does not give sufficient credence to the realities of
the business environment. See Portland Mfg. Co. v. Commissioner,
56 T.C. at 72. One of respondent’s theoretical suggestions, for
example, is that Properties should have caused Bottlers to buy
the facilities once Bottlers failed to pay the full amount of
rent. This decision would not have been in the best interests of
Bottlers, and the management group, owing fiduciary duties to
Bottlers, would not have made it. There were also no other
third-party buyers for the bottling facilities, although
respondent suggests other actions Bottlers should have taken to
seek them. The management group searched fruitlessly for other
third parties when the G&K deal collapsed.
While the management group may have made other choices if
they had the benefit of hindsight, they did what they thought was
best for Bottlers based on the circumstances at the time. See
id. Properties was unable to repay the loan once G&K’s financing
fell through and G&K became unable to purchase the facilities.
Cf. Crown v. Commissioner, supra; Findley v. Commissioner, supra.
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