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v. Burnet, 58 F.2d 530, 532 (D.C. Cir. 1932), affg. 18 B.T.A. 504
(1929). A creditor who voluntarily relinquishes valuable
collateral provided by a solvent debtor also may not deduct the
debt as worthless. O’Bryan Bros. v. Commissioner, 127 F.2d 645,
646 (6th Cir. 1942), affg. 42 B.T.A. 18 (1940).
Neither party was able to point us to a case directly on
point. Respondent relies on a recent Court of Federal Claims
decision indicating that a taxpayer may not deduct a worthless
debt where the taxpayer’s actions, standing alone, have made the
debt uncollectible. PepsiAmericas, Inc. v. United States, 52
Fed. Cl. 41 (2002). Respondent argues that we should extend the
reasoning of PepsiAmericas to this case to hold that petitioner
may not deduct a portion of the Properties loan as a worthless
debt because Bottlers contributed to its worthlessness by failing
to pay Properties the full amount of rent.
In PepsiAmericas, the taxpayer made a loan to its ESOP,
terminated the ESOP, and tried to deduct the amount the ESOP owed
as a worthless debt. Id. The court held the taxpayer could not
deduct the amount lent to the ESOP as a worthless debt because
the taxpayer’s own conduct caused the worthlessness. Id. at 48
(citing Roth Steel Tube Co. v. Commissioner, supra at 1181,
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