Kenneth C. & Becky J. Theisen - Page 3

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               The issues remaining for decision are: (1) Whether                     
          respondent proved that petitioners did not engage in their Amway            
          activity for profit within the meaning of section 183; (2) if               
          not, whether petitioners proved they are entitled to deduct                 
          expenses in carrying out the Amway activity as ordinary and                 
          necessary expenses under section 162; and (3) whether respondent            
          proved that petitioners are liable for the accuracy-related                 
          penalties under section 6662(b)(1).                                         
               The facts as stipulated are so found.  The stipulation of              
          facts and attached exhibits are incorporated herein by this                 
               Petitioners resided in Austin, Texas, at the time they filed           
          their petition.  For convenience and clarity, we have combined              
          the findings of fact and opinion.                                           
               Petitioner Kenneth C. Theisen (petitioner) was employed full           
          time by the Internal Revenue Service (Service) as a revenue agent           
          during the years in issue.  He had been so employed for the past            
          10 years.  He has a Bachelor of Science in Accounting and is a              
          Certified Public Accountant.  During 1992 and 1993, petitioner              
          Becky J. Theisen was employed as a travel agent.  Petitioners               
          were the parents of two children.                                           
               Petitioners had been Amway distributors in 1979 and 1980.              
          Petitioners again became Amway distributors in 1991, and were               
          distributors during 1992 and 1993, the years in issue, and at               

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