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8/31/91. Therefore the full $274,980 must be deducted in that
year. Lucas v. Ox Fibre Brush Co., 281 U.S. 115, 120 (1930).
Issue 2: Accumulated Earnings Tax
Background
Like many adult entertainment businesses, petitioner
operated in the face of intense and unremitting hostility from
residents of the local community and local government
authorities. Exclusionary zoning, stringent enforcement of
building code requirements and licensing requirements, indecency
ordinances and criminal prosecution are weapons commonly deployed
to contain the growth of such businesses or eradicate them
altogether. The authorities of San Bernardino County used this
full arsenal against petitioner. The history of this conflict
and of petitioner’s other legal problems bears directly on the
question of the extent of petitioner’s expected and actual needs
for funds during the years at issue.
Trouble with the local authorities dates back to 1985, the
year in which petitioner commenced operations. In that year the
county adopted Ordinance No. 2940, which prohibited adult
entertainment businesses from locating in the area where
petitioner was currently operating and where a new building was
being constructed for its use. Petitioner sought an injunction
against enforcement of the ordinance on the ground that it was
unconstitutional. The lawsuit concluded in 1987 with a decision
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