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“Business Expenses” incurred in 1996 and 1997, and a chart of
“Office Expense” from 1996. They maintained and produced monthly
calendars reflecting both Amway-related entries and personal
entries for both 1996 and 1997. Also, Ms. Ingram claimed that
they opened a bank account for their Amway activity.
Nevertheless, we conclude that petitioners’ overall approach
to their activity was not businesslike. See sec. 1.183-2(b)(1),
Income Tax Regs. The records that petitioners produced do not
reflect details concerning their Amway activity, such as products
sold, clients, or downline distributors. In addition, the goals
do not provide any indication of how petitioners planned to
achieve the points and commissions, or how to find the customers.
Despite being given ample opportunity to produce relevant
business records, petitioners failed to do so, and they failed to
offer an explanation for their absence. For example, petitioners
failed to produce a copy of their business plan and bank records.
Petitioners produced an “Office Expense” chart for 1996, but not
for 1997, and did not offer any supporting bills or proof of
payment of any of the expenses. Petitioners did not retain paper
copies of the quarterly, semiannual, and annual reports of income
and expenses that they purportedly kept. Petitioner explained
that when their computer upgrade crashed, they lost all reports.
We are skeptical that all data that went into the reports was
irretrievably lost. Petitioners’ inability to produce the
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