-46-
accumulated earnings tax. Respondent contends that petitioner's
failure to buy land from March 1986 to December 1990 shows that
petitioner was not serious about buying land. We disagree. The
1988 CEP projects expenses of $1,500,000 for land. The CEP for
1989 projected expenses of $2,000,000 for land. Petitioner paid
about $2,250,000 for the Union Camp property in fiscal year 1991.
The fact that petitioner bought the Union Camp property in
December 1990 does not show that petitioner was not previously
interested in buying land. Sherwood Gustafson learned in 1987 or
1988 that Union Camp might sell some of its land adjoining
petitioner's land. Sherwood Gustafson credibly testified that
petitioner would have bought the Roberts property if it had not
bought the Union Camp property. Petitioner had specific,
definite, and feasible plans in fiscal year 1989 to use the
$2,000,000 to buy the Union Camp property. We conclude that it
was reasonable for petitioner to accumulate $1,500,000 in fiscal
year 1988 and $2,000,000 in fiscal year 1989 to buy land.
4. Debt Retirement
Petitioner has the burden of proof on this issue.
Gustafson's Dairy, Inc. v. Commissioner, T.C. Memo. 1995-11.
Petitioner accumulated $3,300,000 in fiscal year 1987 to
retire debentures held by Pete Gustafson. Respondent points out
Page: Previous 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 NextLast modified: May 25, 2011