Eyefull Incorporated - Page 18

                                       - 18 -                                         
          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            






Page:  Previous  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  Next

Last modified: May 25, 2011