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as time progressed. In 1992 and 1993, however, petitioners
earned substantial amounts of income from sources other than
Amway. Additionally, petitioners did not provide respondent with
either a business plan or profit projections2. Finally, as noted
above, many activities associated with an Amway distributorship
have been found to contain significant elements of personal
pleasure and benefit. Based upon prior cases and the facts
available to her in this case, respondent reasonably took the
position in the answer that petitioners did not operate their
Amway distributorship with the objective of making a profit.
As respondent pursued her investigation, she learned more
facts concerning petitioners' Amway operation. In response to
discovery requests, petitioners provided respondent with docu-
ments substantiating their expenditures. Through affidavits
given by petitioners, respondent learned that petitioners were
receiving extensive guidance from a more experienced Amway
distributor. Perhaps most significantly, in March 1996, respon-
dent learned that petitioners reported a small profit from the
activity for 1995. Upon learning this information, respondent
reviewed her earlier position. Settlement negotiations were
2Respondent attached a one-page document to her notice of
objection to petitioners' motion for award of reasonable liti-
gation costs filed July 10, 1996. Petitioners had provided this
document to the revenue agent. Petitioners claim that the docu-
ment represents the profit projections of their Amway business.
We agree with respondent's characterization of the document as
indecipherable.
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