Zeeman Manufacturing Company, Inc. - Page 14

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               2.   Expansion of Costa Rican Manufacturing Facility                   
               Petitioner's next ground set forth in its statement is that            
          it needed to accumulate $1,800,000 during each of the taxable               
          years in issue for building a second manufacturing facility in              
          Costa Rica.  During 1988, petitioner constructed a 20,000-square            
          foot factory building in Costa Rica.  The total cost of                     
          purchasing, building, outfitting, and installing fixtures in the            
          facility and of training the workforce exceeded $1 million.                 
               Production in Costa Rica proved quite profitable because the           
          labor and operating costs were lower than in Gainesville,                   
          Georgia.  Accordingly, during 1990 and 1991, petitioner embarked            
          upon a long-range plan to expand production in Costa Rica.                  
          Additionally, petitioner determined that it required extra                  
          manufacturing space to meet its current needs.                              
               On January 13, 1992, the petitioner's board of directors met           
          and memorialized its plan to build a second manufacturing                   
          facility in Puntarenas, Costa Rica.  At the meeting, the board              
          adopted the following resolution:                                           
               That the board give serious consideration to the                       
               investment in a second manufacturing facility in Costa                 
               Rica in the newly established Free Zone Industrial Park                
               in the city of Puntarenas, Costa Rica.  The government                 
               of Costa Rica announced substantial labor subsidies to                 
               companies that open plants in Puntarenas where much                    
               unemployment exists.  Our company requires extra                       
               manufacturing space to fill the needs of our current                   
               and future stores.                                                     
                    Although it would require a large outlay of money                 
               to build, equip, and provide goods in process in the                   






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