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Petitioner presented expert testimony that it would have
been reasonable to set aside $100,000 to $250,000 to provide for
the legal expense of defending itself against exclusionary
zoning. Petitioner argues that it was therefore justified in
accumulating this amount in each taxable year. If petitioner in
fact planned accumulations for this purpose, the accumulations
may well have been justified. The existence of a reasonable
need, however, does not suffice to establish the existence of a
specific, definite, and feasible plan to meet the need.
Snow Manufacturing Co. v. Commissioner, 86 T.C. at 277. Krontz
testified that he had been expecting Ordinance No. 3465 for some
time before its enactment in October 1991. Yet there is no
evidence that petitioner’s management formulated plans to
challenge the ordinance, let alone provide for the costs of such
a challenge at any time during the years at issue. Based upon
the company’s experience challenging the constitutionality of the
predecessor of Ordinance No. 3465 between 1985 and 1987, it would
have been reasonable to expect the costs of such litigation would
be spread over more than 1 year and could easily be covered by
the current year’s cash flow. Petitioner’s total legal expenses
during the years of the prior litigation amounted to only
approximately $70,000. We are not persuaded that any portion of
the accumulations for TYE 8/31/89 through TYE 8/31/92 can be
accounted for by plans to provide for anticipated legal expenses.
Workers’ Compensation
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