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petitioner’s cash flow that they could not reasonably have
expected to be able to finance the acquisitions without
accumulation. Therefore the acquisitions do not explain any part
of the accumulations in TYE 8/31/90 and TYE 8/31/91.
Parking
Petitioner argues that its efforts to secure additional
parking to comply with County Building and Safety Department
requirements justify an accumulation of $500,000 in TYE 8/31/91
and TYE 8/31/92. Respondent allowed no amount for this purpose.
Petitioner presented evidence of only one definite purchase
plan that would have warranted an accumulation in any of the
years at issue. This was the plan to acquire the property that
petitioner is currently renting from MIC. Once petitioner
concluded leasing arrangements with MIC, its needs would have
been satisfied and no accumulation of funds to acquire property
for parking would be justified. No evidence in the record fixes
the time of this transaction. We can confidently infer, however,
that petitioner and MIC had reached an agreement before the end
of TYE 8/31/92, because the loan to MIC, which partly financed
MIC’s acquisition of the rental property, appears on petitioner’s
tax return for TYE 8/31/92.
It is possible that petitioner had already abandoned its
plan to purchase the property before the end of TYE 8/31/91.
Krontz testified that petitioner paid MIC $8,000 per month, or
$96,000 per year under the lease. On its tax return for TYE
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