Action Distributing Company, Inc. v. Commissioner of Internal Revenue

The question presented is whether Action Distributing Company, Inc. (hereinafter “Action”) is entitled as United Beverage Wholesalers, Inc.’s (hereinafter “United”) transferee to a deduction for leasehold improvement expenditures which remained unamortized when the United/Byrne leases were terminated. The Tax Court held that Action was not entitled to a deduction because the terminations of the leases effected a liquidating distribution to Byrne.

This case arises from Robert Byrne’s decision to leave the wholesale beer distribution business. As of July 19, 1976, Byrne owned one hundred percent…