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costly structural changes, including cement reinforcement of the
first floor ceiling, were probably performed at the same time as
the remodeling work in TYE 8/31/92 because the expenditures for
repairs and improvements reflected on petitioner’s tax returns
for TYE 8/31/89, TYE 8/31/90, and TYE 8/31/91 are comparatively
modest and do not even approach Hagerman’s estimate of the total
cost of compliance. The need to make these structural changes
had been identified in TYE 8/31/90, and specific plans for
compliance were required. Consequently we believe that the plans
that were eventually executed at a cost of $352,420 in the first
half of TYE 8/31/92 could reasonably explain an accumulation of
approximately this amount at the end of both TYE 8/31/90 and TYE
8/31/91.
Under some circumstances, a lengthy delay in the execution
of alleged plans invites skepticism as to whether the plans were
sufficiently definite and specific to satisfy the requirements of
the regulations. See Suwannee Lumber Manufacturing Co. v.
Commissioner, T.C. Memo. 1979-477; sec. 1.537-1(b), Income Tax
Regs. In this case the delay is understandable. Remodeling was
contingent on county approval, county approval was contingent on
the availability of additional parking space, and coordination of
the major structural corrections with the elective remodeling
work was likely to have been efficient from both an economic and
architectural standpoint. Considering the bureaucratic and
technical complications, we do not interpret a delay of 1 to 2
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