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O’Bryan Bros., Inc. v. Commissioner, supra at 646, and Am. Felt
Co. v. Burnet, supra at 532).5
PepsiAmericas is not controlling. There are significant
differences between the facts of PepsiAmericas and the facts
here. Control is the first major difference. PepsiAmericas
controlled the entity whose debt it caused to become worthless.
PepsiAmericas, Inc. v. United States, supra. In contrast,
Bottlers did not control Properties. While the management group
had some ownership of both entities, the parties stipulated that
the entities themselves were not related. Bottlers itself could
not control the decisions of Properties, alter the ownership of
Properties, or cause Properties to take any actions whatsoever
other than under the lease and the loan.
The cause of the worthlessness is the second major
difference. While PepsiAmericas terminated its ESOP and thus
unilaterally caused the ESOP to be unable to pay its debts,
several factors contributed to the worthlessness of the
5The PepsiAmericas and O’Bryan cases broadly interpret other
cases involving this issue. See PepsiAmericas, Inc. v. United
States, 52 Fed. Cl. 41, 48 (2002) (citing Roth Steel Tube Co. v.
Commissioner, 620 F.2d 1176, 1181 (6th Cir. 1980), affg. 68 T.C.
213 (1977); O’Bryan Bros. v. Commissioner, 127 F.2d 645, 646 (6th
Cir. 1942), affg. 42 B.T.A. 18 (1940); and Am. Felt Co. v.
Burnet, 58 F.2d 530, 532 (D.C. Cir. 1932), affg. 18 B.T.A. 504
(1929)). A narrower interpretation is that a creditor cannot
release a solvent debtor and then claim a deduction for a
worthless debt. Roth Steel Tube Co. v. Commissioner, supra;
O’Bryan Bros. v. Commissioner, supra; Am. Felt Co. v. Burnet,
supra.
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