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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
reference.
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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